U.S. Stocks Gain After Retail Sales Rise, Bond Yields Decline

June 13 (Bloomberg) -- U.S. stocks gained after retail sales jumped more than forecast and bond prices rose.

Target Corp., the second-biggest discount chain, and Home Depot Inc., the largest home-improvement retailer, climbed. Energy producers led by Exxon Mobil Corp. and ConocoPhillips contributed the most to the increase in the Standard & Poor's 500 Index after oil prices advanced.

Stocks plummeted yesterday after the 10-year U.S. Treasury yield soared to its highest since 2002 and heightened concern that rising borrowing costs will reduce takeovers and corporate profits. Bond yields fell today even after the retail sales report and a higher-than-expected gain in import prices stoked inflation concerns.

``Positive retail sales numbers improve the prospects that the second quarter is going to be stronger than the first, which is what investors are looking for,'' said Steve Neimeth, who manages about $850 million at AIG SunAmerica Asset Management in Jersey City, New Jersey. ``With bond yields down, that should add more support to the market.''

The S&P 500 added 8.71, or 0.6 percent, to 1501.71 at 1:49 p.m. in New York. The Dow Jones Industrial Average increased 61.43, or 0.5 percent, to 13,356.44. The Nasdaq Composite Index advanced 11.76, or 0.5 percent, to 2561.53.

The 10-year Treasury yield fell 7 basis points, or 0.07 percentage point, to 5.23 percent.

Retail Sales

Retail sales in the U.S. rose by the most in more than a year in May, the Commerce Department said, easing concern that record gasoline prices and falling home values would slow consumer spending. The 1.4 percent increase was more than twice the median forecast in a Bloomberg survey of economists. Purchases excluding automobiles rose 1.3 percent.

Target added 44 cents to $62.90. Home Depot increased 26 cents to $37.62.

Financial shares in the S&P 500 added 0.5 percent to the S&P 500's gain as lower borrowing costs may increase demand for loans.

Citigroup, the world's biggest financial firm, added 50 cents to $53.10. JPMorgan, the third-largest U.S. bank, rose 44 cents to $49.80.

Energy shares gained 1.1 percent as a group after crude oil jumped $1 to $66.35 a barrel. A government report showed a smaller-than-expected gain in U.S. supplies of motor fuel last week.

Exxon Mobil Corp., the world's biggest oil company, added 68 cents to $82.68. ConocoPhillips, the No. 2 U.S. refiner, climbed 45 cents to $77.56. Schlumberger Ltd., the world's largest oilfield-services provider, rose $1.62 to $80.36.

Import Prices

Prices of goods imported into the U.S. increased three times faster than forecast in May on higher prices for oil and industrial supplies, renewing concern that inflation may accelerate. The 0.9 percent rise in the import price index followed a 1.4 percent gain in April, the Labor Department reported today.

More than three stocks rose for every one that fell on the New York Stock Exchange. Some 718 million shares changed hands, 3.9 percent less than the same time a week ago.

Utility companies in the S&P 500 gained 1.1 percent as a group and telephone shares increased 0.5 percent, as falling bond yields make their dividends more attractive.

Utilities and telecommunications companies both have dividend yields of 3.02 percent, the highest among 10 industries.

Duke Energy Corp., the fifth-largest U.S. utility owner, rose 25 cents to $18.50. AT&T Inc., the biggest U.S. phone company, increased 37 cents to $39.45.

AvalonBay, Molson Coors

AvalonBay Communities Inc. jumped $5.92, or 4.9 percent, to $126.81 for the steepest advance in the S&P 500. Investors speculated the third-largest U.S. real estate investment trust for apartments will be bought after Tishman Speyer Properties LP and Lehman Brothers Holdings Inc. purchased rival Archstone- Smith Trust for $13.5 billion last month.

Molson Coors Brewing Co. added $4.02 to $93.62, the biggest gain since February. The brewer was upgraded to ``buy'' at UBS AG, which said the shares will benefit from growing U.S. and Canadian sales, cost savings and speculation about a merger or acquisition.

Freeport-McMoRan Copper & Gold Inc. rose to a record and led a measure of material producers higher after saying it may sell assets to pay for debts incurred in its $26 billion acquisition of Phelps Dodge Corp. The world's biggest publicly traded copper company surged $3.63 to $82.60.

Boeing, Bristol-Myers

Boeing Co. added $1.45 to $97.93. The world's second- largest commercial airplane maker raised its 20-year forecast for world jetliner deliveries by 5.2 percent because of increasing demand in Asia and Russia.

Bristol-Myers Squibb Co. climbed 76 cents to $29.45. The maker of the blood-thinner drug Plavix was raised to ``buy'' from ``hold'' by Citigroup.

Blockbuster Inc. jumped 34 cents, or 8.6 percent, to $4.30, its steepest advance in more than six months. A Citigroup Investment Research analyst recommended buying the stock, saying the company may win subscribers with lower prices. The largest video-rental chain yesterday introduced an online-movie rental plan that's cheaper than rival Netflix Inc.

Netflix lost 98 cents to $19.10.

Stocks also got a boost from a report that showed mortgage applications unexpectedly jumped.

Mortgage Applications

The Mortgage Bankers Association's index of applications to buy a home or refinance a loan rose 6.6 percent last week, the biggest increase since March. Analysts surveyed by Bloomberg had expected a decrease of 1.7 percent.

Investors were also awaiting the Federal Reserve regional economic survey, known as the Beige Book for the color of its cover, at 2 p.m. New York time.

The S&P 500 plunged 1.1 percent yesterday, while the Dow average lost 1 percent and the Nasdaq Composite retreated 0.9 percent.