Wall St. gains as small-caps rally; biotech lifts Nasdaq

NEW YORK (Reuters) - U.S. stocks rose on Thursday, hitting session highs in late afternoon trade, led by gains in small-cap stocks while the Nasdaq advanced on a rally in biotech shares.

Housing stocks also ranked among the market's biggest outperformers, with the housing index <.HGX> up 1.3 percent after existing home sales rebounded in April. Homebuilders were among the S&P 500's biggest gainers, with D.R. Horton Inc up 2.6 percent at $22.70 and PulteGroup Inc up 2.2 percent at $19.23.

Biotech stocks rallied, lifting the Nasdaq index and extending the recent trend of volatile trading. Small-caps and the so-called "momentum" names in the Internet and biotech spaces have been following a trend where they mimic the broader market's direction, but move in an outsized fashion, often without specific news.

"Small-caps and momentum names are doing good today, but we really need another solid gain in the overall market for those high growth-oriented, high-risk stocks" to move away from the day-to-day volatile trading, said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

Overall, broader gains seemed limited as the latest batch of mixed data failed to deliver the confidence boost needed by investors to push indexes past record highs set last week.

"We have been in a 'two steps forward, one step back' progression on the domestic economy, and that can be extended to the global economy as well," said Jim Russell, senior investment strategist at U.S. Bank Wealth Management in Cincinnati.

"We would characterize the rebound out of the weather-inhibited first quarter as a bit disappointing. We were looking for perhaps a bit more growth by mid- to late May than what we are seeing."

The S&P 500 is about 8 points away from its record intraday high set on May 13, but the index has been caught between the high and its 50-day moving average for the past week as data left investors unsure about the pace of the economic recovery.

The Dow Jones industrial average <.DJI> rose 15.96 points or 0.1 percent, to 16,549.02. The S&P 500 <.SPX> gained 6.29 points or 0.33 percent, to 1,894.32. The Nasdaq Composite <.IXIC> added 29.84 points or 0.72 percent, to 4,161.38.

Shares of JD.Com soared in their market debut on Thursday, jumping 9.8 percent to $20.87 after the Chinese e-commerce company raised $1.78 billion in an initial public offering.

The stock was the Nasdaq's second most-active name, with more than 77 million shares traded by late afternoon.

Among "momentum" names, noted for high growth and perceptions of excessive valuation, Vertex Pharmaceuticals shares rose 6 percent to $71.19, while Alexion Pharma gained 3 percent to $161.22.

The Nasdaq biotechnology index <.NBI> gained 2.2 percent. Salesforce.com advanced percent 7.5 percent to $53.94.

Best Buy Co rose 2 percent to $25.86. The electronics retailer reported first-quarter earnings that topped expectations and domestic comparable store sales that fell more than expected.

Dollar Tree jumped 6.4 percent to $53.19. The stock was the S&P 500's best performer after the retailer, which caters to low-income shoppers, posted first-quarter results and gave an outlook for the second quarter and full year.

Data showed the number of Americans filing new claims for unemployment benefits rose in the week ended May 17 and were above expectations but remained near 7-year lows, pointing to labor market conditions that keep strengthening.

U.S. home resales rose in April and the supply of properties on the market hit its highest since August 2012, hopeful signs for the housing market's stalled recovery.

(Reporting by Angela Moon; Editing by Jan Paschal)

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