By Elizabeth Stanton
May 8 (Bloomberg) -- U.S. stocks advanced, rebounding from their biggest drop in a month, after Wal-Mart Stores Inc. and News Corp. posted sales that topped analysts' estimates and commodity producers rallied on higher gold and oil prices.
Wal-Mart rose as shoppers seeking discounts boosted sales. News Corp., the owner of Fox television, jumped on revenue that was lifted by advertisements for ``American Idol'' and the Super Bowl. Freeport-McMoRan Copper & Gold Inc. and Chevron Corp. helped send raw-material and energy companies to the biggest gains in the Standard & Poor's 500 Index. Alcoa Inc. climbed to a six-month high after naming a new chief executive officer. The market's advance was limited as record oil prices pushed other consumer shares down.
The S&P 500 added 5.11, or 0.4 percent, to 1,397.68. The Dow Jones Industrial Average increased 52.43, or 0.4 percent, to 12,866.78. The Nasdaq Composite Index rose 12.75, or 0.5 percent, to 2,451.24. About six stocks gained for every five that fell on the New York Stock Exchange.
``Capital is going to go where the opportunity is and the opportunity right now is in the energy and material sector,'' said Gary Wolfer, who oversees $1.2 billion as senior vice president at Univest Wealth Management & Trust in Souderton, Pennsylvania. ``There's, for lack of a better term, a world economic party and that world is going to need a lot more'' commodities, he said.
Seven of 10 industry groups in the S&P 500 advanced as the market was also boosted by a government report showing initial jobless claims dropped last week more than economists had forecast.
Freeport rallied 3.2 percent to $118.07. Gold rose to a one-week high as record energy costs and a weakening dollar boosted demand for a hedge against inflation. The dollar fell against the euro and the British pound after the European Central Bank and the Bank of England kept borrowing costs steady to fight inflation.
Alcoa Inc., the world's third-largest aluminum producer, rallied 4.1 percent to $39.65 for the biggest gain in the Dow average. Alcoa named Klaus Kleinfeld chief executive officer, replacing Alain Belda, who will step down after almost four decades with the company.
The S&P 500 Materials Index jumped 2.3 percent as 26 of its 28 companies advanced.
Chevron, the second-biggest U.S. oil company, climbed 2.3 percent and led energy shares to a 1.9 advance after crude climbed 16 cents to $123.69 a barrel.
Wal-Mart rose 33 cents to $57.16. Sales at stores open at least a year climbed 3.2 percent, beating the company's forecast for a gain of as much as 3 percent. Chief Executive Officer H. Lee Scott slashed prices on drugs and other products by as much as 30 percent in January to promote Wal-Mart as the low-cost store for shoppers struggling with rising food and fuel costs.
U.S. consumers at all income levels ``are carefully scrutinizing every single expense, and that's working to the benefit of the discounters,'' said David Dietze, president of Point View Financial Services in Summit, New Jersey, which manages $140 million. Dietze recommended Wal-Mart and Costco Wholesale Corp. in an interview on Bloomberg Television in December.
Wal-Mart closed at a three-year high of $58.61 on April 29. Costco, the largest U.S. warehouse-club chain, rose to a record $72.65 on May 6. Costco today said April sales at stores open at least a year advanced 8 percent, more than analysts estimated. The shares fell 88 cents to $71.20.
News Corp. added 2.5 percent to $19.68. The media company controlled by Rupert Murdoch posted third-quarter revenue that topped analysts' estimates and profit that tripled from a year earlier because of a gain from the sale of its stake in DirecTV Group Inc.
Still, oil's fifth straight advance weighed on other consumer shares. The S&P 500 Retailing Index slid 1.9 percent, led by a 5.6 percent decline in Dillard's after the department- store chain posted a drop in same-store sales.
State Street Corp., the largest money manager for institutions, fell $1.27 to $72.73 on concern it may have to pay more than 12 times as much as it budgeted for client lawsuits over losses on subprime-mortgage investments. State Street helped send financial shares down 1.2 percent as a group.
CIT Group Inc., the commercial lender trying to escape a cash squeeze, dropped 2 percent to $12.25 after Fitch Ratings said it faces ``liquidity challenges.''
Freddie Mac and Fannie Mae, the biggest U.S. mortgage- finance companies, fell 2.2 percent and 4.9 percent, respectively. Wachovia Corp., the fourth-largest U.S. bank, lost 3.1 percent to $27.83.
Banks, brokerage firms and insurance companies in the S&P 500 yesterday fell 3.7 percent as a group and led the market to its steepest decline in a month on concern new disclosure requirements for investment banks will limit their profits.
Financial companies led the market's rebound from a 19- month closing low on March 10, climbing 17 percent through May 6 as the S&P 500 gained 11 percent.
Earnings from Google Inc., Intel Corp., Boeing Co. and American Express Co. also fueled the advance. About 68 percent of companies in the index that reported first-quarter results so far have topped estimates, according to Bloomberg data.
``Earnings definitely are better than many expected, and that's encouraging,'' said Kelli Hill, portfolio manager at Ashfield Capital Partners in San Francisco, which manages $4.5 billion. ``What's continued to drive volatility is some of the guidance. Companies are being very, very conservative in setting themselves up for the second half.''
Crocs Inc., the maker of perforated plastic clogs, surged $1.44, or 14 percent, to $11.40. The company said full-year profit, excluding costs to close a factory, will be $1.70 to $1.80 a share. Analysts estimated $1.69, according to the average of five projections compiled by Bloomberg.
Barr Pharmaceuticals Inc. tumbled 23 percent to $38.10, the biggest drop in the S&P 500. The maker of generic drugs and the Plan B emergency contraceptive reported a first-quarter profit that missed analysts' estimates and lowered its full year earnings estimate.
Hansen Natural Corp. dropped $5.46, or 15 percent, to $30.14 after the maker of Monster energy drinks reported first- quarter profit of 29 cents a share, missing the average analyst estimate of 37 cents in a Bloomberg survey.
About 1.2 billion shares changed hands on the NYSE, 19 percent less than the three-month daily average.
The Russell 2000 Index, a benchmark for companies with a median market value 95 percent smaller than the S&P 500's, gained 0.5 percent to 719.55. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, rose 0.4 percent to 14,121.06. Based on its advance, the value of stocks increased by $67.9 billion.