Stocks up; S&P 500 close to new record

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After a sluggish start, stocks were firmly higher Thursday afternoon, with the SP 500 in striking distance of a new high.

The SP 500 was up 0.3% in midday trading, coming within a few points of its record close of 1,897 last week. The Dow Jones industrial average and the Nasdaq were both up as well with the Nasdaq half a percent higher. The move builds on momentum from Wednesday, when the Dow surged more than 160 points.

Retail stocks have been in focus this week, with quarterly reports from Target (TGT, Fortune 500) to Tiffany Co. (TIF) grabbing headlines.

Is Best Buy getting its groove back?

On Thursday, Best Buy (BBY, Fortune 500) shares were up as much as 5% after the electronics retailer reported earnings that beat analysts’ expectations, raising hopes the company’s turnaround plan is bearing fruit. The stock was down sharply in the futures market before active trading started and has since pulled back to around 1% gains.

Some traders on StockTwits were surprised to see Best Buy shares bounce back.

A trader using the handle TheGenius was stumped. “$BBY why the heck is this up?”

Best Buy was one of the top performing SP 500 stocks last year, but it’s down more than 30% so far in 2014. Still, some traders believe changes under CEO Hubert Joly, including store closings and headcount reduction, are steps in the right direction.

$BBY Bottom line better than expected, good signs in online area. Still has ways to go, but reasonable turnaround progress. Remain long,” read a post by kgpittm.

Retail stock rally — to a point

Dollar Tree (DLTR, Fortune 500) also reported better-than-expected earnings, sending shares of the discount retailer up 7%.

Sears Holdings (SHLD, Fortune 500), which operates the Kmart and Sears brands, said the pace of store closings picked up to 80 closings in the first quarter and that further store closings are possible the rest of this year. Shares fell 4%.

House wares retailer Williams-Sonoma (WSM) reported strong earnings and boosted its outlook for the coming months late Wednesday. The stock was up nearly 9%.

It was the second quarter in a row that William-Sanoma beat expectations. Wednesday’s report, coming on the heels of a strong quarter for Tiffany Co., raised expectations for the luxury retail sector.

Related: The 1% is spending: Luxury stocks soar

$WSM destroys… again. Good news on the end of $RH. Luxury consumer is doing so well,” said crbarnette.

Shares of RetailMeNot (SALE), a provider of online coupons, sank 10% on a report that changes to a Google (GOOG, Fortune 500) search algorithm caused a sharp drop in the company’s online traffic. But some traders said the selling was an overreaction.

$SALE SELL SELL SELL SELL!!!!!! So I can get pick up cheaper.. This is Google backed, you really think they are going to punish themselves?” asked StockTwits user rml251.

Chinese ecommerce company (JD) started trading today on the Nasdaq. The stock priced at $19 a share, on the high end of its expected range, and is up more than 8% in midday trading.

Related: Good news for Alibaba: Rival JD pops in IPO

Smoke ’em if you got em

Shares of big tobacco companies were also lighting up.

Reynolds American (RAI, Fortune 500) and Lorillard (LO) are reportedly in talks to join forces and create the second largest U.S. tobacco company. Lorillard, which makes the e-cigarette blu, would give Reynolds access to the growing market for electronic cigarettes. A deal could also benefit U.K.-based British American Tobacco (BTAFF), which owns a large stake in Reynolds.


Both Reynolds and Lorillard were down Thursday after big spikes at the end of the day yesterday.

Related: Fear Greed Index

McTrouble for McDonald’s?

McDonald’s (MCD, Fortune 500) is also a focus point for investors and protesters Thursday as the fast-food operator holds its annual shareholder meeting in Oak Brook, Illinois. There’s likely to be a lot of drama, although little movement in the stock.

Over 100 people were arrested outside the McDonald’s corporate campus Wednesday as they protested for higher wages. There could be more arrests Thursday as protesters are promising to return.

In economic news, the government said first-time claims for unemployment benefits rose sharply in the week ended May 17. Sales of existing homes rose 1.3% in April, according to the National Association of Realtors.

Two more retailers, Gap (GPS, Fortune 500) and Aeropostale (ARO) are due to report after the close Thursday, as is tech giant Hewlett-Packard (HPQ, Fortune 500).

Related: CNNMoney’s Tech30

European markets ended modestly higher. Asian markets closed mostly higher, buoyed by better-than-expected manufacturing data from China. Stocks in Thailand were little changed despite news that military officials had taken control of the government, marking the latest in a string of coups in the past few decades.

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