Stocks Hold Gains, Led by Techs; Spain in Focus


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(CNBC) Stocks were off their highs Thursday, pressured by a batch of weaker-than-expected economic reports, but hopes the Chinese government would step in to bolster the country’s slowing growth helped limit losses.

The Dow Jones Industrial Average held small gains, led by Bank of America [BAC 8.985 0.17 (+1.93%) ], after logging its fourth-straight day lower in the previous session.

The S&P 500 and the Nasdaq were also in positive territory. The CBOE Volatility Index, widely considered the best gauge of fear in the market, slid near 16.

Most key S&P sectors were higher, led by techs and financials, while utilities slipped.

“The idea that the Chinese are going to do extensive stimulus had perked everything up…[but] I was amazed that the data this morning didn’t put a bigger dent in this rally—those numbers (durable goods and GDP) were almost recessionary,” Art Cashin, director of floor operations at USB Financial Services. “Meanwhile, we’re also pretty oversold, we’ve been down several sessions in a row.”

On the economic front, the U.S. economy expanded at a tepid 1.3 percent annual rate, the slowest pace since the third quarter of 2011 and down from last month’s 1.7-percent estimate, according to the Commerce Department. Economists had expected a reading of 1.7 percent.

Durable goods orders slumped by the most in 3-1/2 years, tumbling 13.2 percent in August, according to the Commerce Department. Economists had expected a decline of 5 percent.

And pending home sales dropped 2.6 percent in August due to a supply shortage, according to the National Association of Realtor

Meanwhile, weekly jobless claims fell to its lowest level since July, falling 26,000 to a seasonally adjusted 359,000, according to the Labor Department. Economists expected claims to decline to 378,000 last week. The four-week moving average for new claims dropped 4,500 to 374,000, snapping five straight weeks of increases.

Chinese stocks rebounded from multi-year lows amid speculation the government would announce steps to support the slowing markets that could include more changes to initial public reforms. In addition, China’s central bank made a $57.9-billion injection into money markets this week, the largest in history.

European shares ended slightly higher. Spain announced the budget for 2013 would focus on cutting spending rather than raising taxes, and the government would pass 43 new laws to reform the economy over the next six months. Spain also said it will tap 3 billion euros from the social security reserve to cover liquidity needs, pushing the euro to session lows against the U.S. dollar.

Protests in Europe, underlined by anti-austerity measures in Madrid and Athens, pushed the region’s market sharply lower in the last few sessions. (See: Violent Protests Hit Greece and Spain)

Hewlett-Packard [HPQ 17.205 0.095 (+0.56%) ] fluctuated after Jefferies cut its rating on the tech giant to “underperform” from “hold” and lowered its target to $14 from $17. H-P stock hit its lowest level in eight years before rebounding in the previous session.

On the M&A front, Sealy [ZZ 2.192 0.052 (+2.43%) ] rallied after the mattress maker said it will be acquired by bigger rival Tempur-Pedic International [TPX 31.811 5.031 (+18.79%) ] for about $242 million and assume about $750 million in debt.

Hartford [HIG 19.29 0.61 (+3.27%) ] gained after the Wall Street Journal reported that Prudential [PRU 54.92 1.18 (+2.2%) ] is near an agreement to buy the financial services company’s individual life insurance division.

Among earnings, Discover Financial Services [DFS 38.66 1.64 (+4.43%) ] jumped after the credit-card provider posted earnings that topped expectations.

Nike [NKE 95.3602 -0.1298 (-0.14%) ], Accenture [ACN 64.51 0.16 (+0.25%) ] and Research In Motion [RIMM 7.10 0.10 (+1.43%) ] are slated to post results after the closing bell.

The government is scheduled to auction $29 billion in 7-year notes, with the results available shortly after 1pm ET.

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