U.S. stocks gained as Alcoa Inc. started the earnings season with an unexpected profit and jobless claims decreased more than forecast. Gold climbed to a record as the dollar weakened to the lowest level in almost 14 months against six major trading partners. Treasuries fell. Alcoa, the largest aluminum producer, added 1.1 percent. Abercrombie & Fitch Co., Limited Brands Inc. and Macy’s Inc. led retailers higher after reporting better-than-estimated sales. Lennar Corp. and D.R. Horton Inc. surged at least 8 percent as Treasury Secretary Timothy Geithner said housing markets are improving and House Speaker Nancy Pelosi said Congress will consider extending a tax-credit for homebuyers. “The worst is behind us,” said Diane Garnick, who helps oversee more than $400 billion as investment strategist at Invesco Ltd. in New York. “Stocks are reacting to better-than- expected economic figures. And Alcoa is a leading indicator and gives us a good sense of industrial production and corporate earnings going forward.” The Standard & Poor’s 500 Index climbed 0.8 percent to 1,065.48 at 4:05 p.m. in New York. The Dow Jones Industrial Average gained 61.29 points, or 0.6 percent, to 9,786.87. Seven stocks rose for every two falling on the New York Stock Exchange. Europe’s benchmark index rallied 1.3 percent, while Asia’s rose as Australian employers unexpectedly added workers. The S&P 500 climbed for a fourth straight day, the longest streak in a month, as the government said first-time jobless claims slid to 521,000 last week, the lowest since January. Economists in a survey estimated 540,000 claims. ‘Different Test’ Benchmark indexes trimmed an earlier rally and Treasuries fell after a government auction of $12 billion in 30-year bonds was met with lower-than-average demand. “The Treasury auction took some wind out of the stock market,” said Peter Boockvar, equity strategist at Miller Tabak & Co. in New York. “While the Treasury has been successful in selling debt to the rest of the world, a 30-year maturity is a different test in light of the weakness in the U.S. dollar. If foreign investors don’t want that bond, maybe the dollar weakness will crimp demand for other U.S. assets.” Alcoa, the first company in the Dow average to report earnings, added 1.1 percent to $14.35. The New York-based company’s profit excluding certain items was 4 cents a share. That beat the average analyst estimate for a 9-cent loss, as metal prices climbed and the company cut jobs. Gold Record Gold climbed to $1,062.70 an ounce, a third straight record, and copper and aluminum led gains in industrial metals as the dollar’s slump prompted investors to buy commodities as a hedge against potential inflation. The Dollar Index, which tracks the U.S. currency against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, dropped 0.7 percent to 75.968 after reaching 75.767, the weakest level since August 2008. Crude oil for November delivery rallied 3 percent to $71.65 a barrel, a two-week high, in New York. Freeport-McMoRan Copper & Gold Inc. , the world’s largest publicly traded copper producer, increased 3 percent to $74.98. Exxon Mobil Corp. added 0.6 percent to $69.05. “The stock rally should continue into the fourth quarter,” said Tom Wirth, senior investment officer at Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York. “Alcoa sent a very good indication for the overall earnings season. Commodities companies are early-cycle plays. That’s another indication that things are getting better.” Earnings Watch S&P 500 companies are projected to report a ninth straight quarter of declining profits, the longest streak since the Great Depression, before returning to growth in the final three months of the year, analysts’ estimates compiled by Bloomberg show. Even so, the S&P 500 has rebounded 57 percent from a 12- year low in March amid signs the worst of a global recession is over. The rally drove its valuation to more than 20 times reported operating income for its companies last month, the most since 2004. S&P 500 retailers gained 1.8 percent as a group after U.S. sales rose for the first time in 13 months as discounts drew shoppers back to stores. Sales at U.S. chains open at least a year climbed 1.1 percent last month, according to Retail Metrics Inc. Seventy percent of retailers reported sales results that exceeded the average of estimates compiled by Retail Metrics. Abercrombie & Fitch, the teen clothing retailer, rose 5.5 percent to $34.46. Limited Brands, owner of the Victoria’s Secret lingerie chain, advanced 3.9 percent to $18.53. Macy’s, the second-largest U.S. department-store chain, added 5.1 percent to $19.53. ‘Broad Signs’ A gauge of 12 homebuilders surged 6.3 percent after Geithner told reporters that housing markets are showing “broad signs” of improvement even though they haven’t yet healed. Pelosi said Congress will consider extending the tax credit for first-time home buyers, currently set to expire Dec. 1. Lennar and D.R. Horton had the two biggest gains in the S&P 500. Home Depot Inc., the largest home-improvement retailer, had the second-biggest gain in the Dow average, rising 2.9 percent to $26.89. JPMorgan Chase & Co. and Goldman Sachs Group Inc., the largest banks to repay U.S. bailout funds, will probably post the industry’s biggest third-quarter profit gains while Citigroup Inc., still gripping its government lifeline, reports another loss. Earnings at JPMorgan may have almost quadrupled to $2.05 billion from the height of the financial crisis a year earlier, according to analysts’ average estimates in a survey by Bloomberg. Goldman Sachs’s profit probably almost tripled to $2.3 billion. Citigroup’s expected $2.58 billion loss would mark its sixth unprofitable quarter in the past eight. Commercial Paper Corporate borrowing in the U.S. commercial paper market expanded the most in almost a year as the economy showed signs of recovering from the recession. Unsecured commercial paper outstanding climbed $67.6 billion, or 5.5 percent, to a seasonally adjusted $1.3 trillion in the week ended Oct. 7, the highest since May 6, the Federal Reserve said on its Web site. That’s the biggest percentage increase since the Fed began buying commercial paper directly from companies at the end of October 2008. Monster Worldwide Inc. advanced 5.7 percent to $18.07. The world’s largest online recruiting company was raised to “overweight” from “neutral” and the share price estimate boosted to $24 from $12 at JPMorgan. Health Overhaul Health insurers slumped after the Congressional Budget Office said an $829 billion overhaul of the health-care industry would reduce the federal deficit, spurring concern that the legislation will gain support and, if it passes, threaten profits for managed care companies. The Senate finance committee will vote on the bill Oct. 13. Pelosi said Democratic lawmakers are considering a windfall profits tax on health insurers to help finance the plan. “The CBO is proving to be little help in preserving the viability of private insurance,” analyst Christine Arnold at Cowen & Co. LLC wrote in a note. WellPoint Inc. and UnitedHealth Group Inc. declined at least 3.6 percent. Broadcom Corp. fell 4.7 percent to $28.54. The maker of semiconductors for wireless headsets and television set-top boxes was cut to “neutral” from “outperform” at Robert W. Baird & Co. Phone Companies Drop Telephone shares had the biggest decline in the S&P 500 among 10 industries, falling 0.8 percent. The companies are under pressure from a Federal Communications Commission inquiry into competition in the wireless industry. FCC Chairman Julius Genachowski yesterday called for new Internet rules designed to prevent Internet providers from manipulating traffic unfairly. The S&P 500 yesterday climbed above its level from a year ago for the first time since January 2008. That could lead to more gains, Bespoke Investment Group said in a report yesterday. After turning positive in 1933, the S&P 500 surged 79 percent in the next year. The end of the 559-day streak between Oct. 30, 1973, and May 12, 1975, led to a 14 percent gain in 12 months, while the 557-day year-over-year slump from June 6, 1969, to Dec. 15, 1970, gave way to a 9.9 percent advance. “The S&P 500 has historically continued to do rather well,” Paul Hickey, an analyst at Harrison, New York-based Bespoke, wrote in a note to clients yesterday. To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

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