U.S. Stocks Gain on Retail Sales, Goldman Hedge-Fund Infusion

U.S. stocks rose after retail sales exceeded economists' estimates and Goldman Sachs Group Inc. shored up one of its hedge funds with $3 billion in new capital.
Goldman, JPMorgan Chase & Co. and Bear Stearns Cos. helped lift the Standard & Poor's 500 Index for a second day. Target Corp., the second-largest U.S. discount chain, led consumer shares to their biggest gain in a week.
The advance followed a rebound in stock markets across Europe and Asia from a two-day slump as the European Central Bank said credit markets are returning to normal.
The S&P 500 added 7.46, or 0.5 percent, to 1461.1 as of 10:11 a.m. in New York. The Dow Jones Industrial Average gained 59.75, or 0.5 percent, to 13,299.29. The Nasdaq Composite Index increased 15.34, or 0.6 percent, to 2560.23.
``Retail sales is a building block number, it's a pretty good indication about where the consumer stands,'' said David Doll, who helps manage about $2 billion as chief executive officer of Kanaly Trust Co. in Houston. ``The market is going to get carried at least early on today by the Fed's actions last week and other central banks.''
U.S. retail sales rose 0.3 percent in July after a 0.7 percent drop in June that was smaller than previously estimated, the Commerce Department said. Economists expected an increase of 0.2 percent, according to a Bloomberg survey.
Retail Rally
Target increased $1.14 to $63.50, leading the S&P 500 Retailing Index to a 1 percent gain. Wal-Mart Stores Inc., the world's largest retailer, advanced 49 cents to $46.56.
Federal funds began trading at 5.25 percent, matching the Federal Reserve's target and suggesting the central bank's injection of $62 billion at the end of last week met banks' demand for cash.
Goldman climbed $2.70 to $183.20. Goldman and investors including C.V. Starr and Perry Capital LLC will invest $3 billion in the firm's Global Equity Opportunities Fund after it fell 28 percent in August.
``We believe the current values that the market is assigning to the assets underlying various funds represent a discount that is not supported by the fundamentals,'' Goldman said.
JPMorgan gained 53 cents to $44.78. Deutsche Bank raised its recommendation on the shares to ``buy'' from ``hold.''
``We're increasing ratings on select banks given a combination of lower stock prices along with our belief that fundamental conditions remain favorable aside from subprime mortgage,'' Deutsche Bank analysts including Mike Mayo in New York wrote in a note to investors. ``Also, major financial firms, such as JPMorgan, are more diverse versus times past.''
Bear Stearns
Bear Stearns advanced $5.80 to $116. Shares of the underwriter of mortgage bonds may sell at double their current price should Bear Stearns consider merging with or being acquired by a larger company, Barron's reported, citing unidentified sources.
The S&P 500 Investment Banking & Brokerage Index has lost 18 percent in the last month as difficulties stemming from subprime mortgages spread through credit markets. That is almost three times the drop of the S&P 500 Index.
Blackstone Group LP, the private equity firm, added $1.64 to $26.92 after its second-quarter earnings more than tripled as revenue at its four main units increased during a record year for leveraged buyouts. Morgan Stanley began coverage of the stock with an ``overweight'' recommendation.
Corning, Novell
Corning Inc. climbed 55 cents to $24. Shares of the biggest maker of glass for liquid-crystal displays may gain 24 percent next year because of LCD product demand, Barron's reported, citing no one.
Novell Inc. added 27 cents to $6.69 in Germany. The software developer owns the copyrights covering the Unix computer operating system and not SCO Group Inc., a judge ruled in a lawsuit over royalties from users of the Linux computer operating system. The ruling by U.S. District Judge Dale Kimball in Salt Lake City on Aug. 10 is a setback for SCO in its lawsuits against Novell and International Business Machines Corp.
BEA Systems Inc. rose 62 cents to $12. The maker of software that helps Internet-based programs exchange information were upgraded at Bear Stearns & Co., Banc of America Securities LLC and UBS Investment Research. The company may be a ``strategic asset'' for a private equity firm, wrote UBS analyst Heather Bellini.
Europe's Dow Jones Stoxx 600 Index climbed 2.1 percent. Japan's Nikkei 225 Stock Average rose 0.2 percent.
ECB Infusion
The European Central Bank added an extra 47.7 billion euros ($65 billion) in emergency money and the Bank of Japan injected 600 billion yen ($5.1 billion) into its system. Last week, central banks in the U.S., Europe, Japan, Australia and Canada added about $136 billion to the banking system.
Axa SA, Europe's second-biggest insurer, climbed 4.1 percent to 29.16 euros. Credit Suisse, the second-largest Swiss bank, advanced 3.7 percent to 83.8 Swiss francs.
European financial stocks were raised to ``overweight'' from ``underweight'' at Morgan Stanley.
``We think that the current financial trouble is properly reflected in valuations and sentiment alike,'' Teun Draaisma, a strategist at Morgan Stanley, wrote in a note today. ``Fundamentals are solid with no recession in sight, and we welcome the fact that central banks globally are clearly stepping up to the plate.''
Draaisma also increased European equities to ``overweight'' from ``neutral.''