Wall Street on course for four-month high after Merkel, Cisco

NEW YORK (Reuters) - Stocks rose on Thursday following comments from German Chancellor Angela Merkel that appeared to back the European Central Bank's efforts to fight the euro zone crisis, while Cisco Systems jumped after it hiked its dividend.

The S&P 500 was on course to hit a four-month closing high in the first significant market move in over a week. Traders are looking for a convincing break above the index's 1,400 level where the market stalled after a 2 percent rally on August 3.

Merkel said ECB chief Mario Draghi's vow to do all that is necessary to defend euro is in line with what European leaders have been saying. Some traders took that as sign Germany may be drawing nearer to backing purchases of sovereign bonds of troubled European nations such as Spain.

"The decline in Spanish yields off of that has been a big boon to the market," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

"There certainly doesn't seem to be that much interest from longs in selling any strength and that is continuing to frustrate the shorts," he said. "As the market continues working higher we could see another squeeze."

The yield on the Spanish 10-year bond fell to 6.57 percent, hitting it lowest level in month.

Cisco Systems Inc rose 8.6 percent after the company said it would hike its dividend 75 percent after surprisingly strong results late Wednesday. The dividend increase countered a gloomy outlook from Cicso on the debt crisis and recession in Europe.

The Dow Jones industrial average <.dji> gained 67.80 points, or 0.52 percent, to 13,232.58. The Standard & Poor's 500 Index <.spx> rose 7.62 points, or 0.54 percent, to 1,413.15. The Nasdaq Composite Index <.ixic> added 24.70 points, or 0.81 percent, to 3,055.63.

Gains were capped as Wal-Mart shed 3.2 percent to $72.08. The world's largest retailer posted a bigger-than-expected jump in quarterly profit but forecast full-year earnings that could fall short of Wall Street expectations.

Wal-Mart traditionally marks the end of the U.S. earnings season. Thomson Reuters data shows that of the 468 companies in the S&P 500 that have reported earnings through Thursday morning, 68 percent beat analysts' expectations, about the same rate as over the past four quarters.

Earnings were the bigger driver given the economic data was largely in line with forecasts. The number of Americans filing new claims for jobless benefits edged higher last week although a longer trend fell close to a four-year low, indicating a slowly healing jobs market.

But housing starts unexpectedly dropped 1.1 percent last month as the industry continues to have trouble finding its footing despite some recent signs of life in the sector.

The S&P capped its longest string of gains since December 2010 on August 10, boosted by expectations of more stimulus from central banks in the United States and euro zone to stimulate their respective economies in September.

Facebook Inc declined 5.4 percent to $20.05 as shares hit the market after the expiration of a lockup period, which had prevented sales by some insiders.

Retailer Sears Holdings Corp reported a quarterly loss in line with Wall Street estimates as lower expenses offset weak sales. Shares rose 5.5 percent to $59.72.

Dollar Tree fell 3.3 percent to $48.33 after the discount retailer posted second-quarter earnings and forecast quarterly earnings and sales below analysts' expectations.

(Editing by Kenneth Barry)

Source: http://news.yahoo.com/stock-futures-signal-higher-wall-street-open-084458017--finance.html

gary carter this means war bobby brown suzanne somers colbert colbert report legionnaires disease