(Updates to midday, changes byline)
*U.S. stocks rise on retailers' upbeat May sales
*Airline stocks rally on brokerage upgrade
*Verizon jumps on news of Alltel deal
By Jennifer Coogan
NEW YORK, June 5 (Reuters) - U.S. stocks rallied on
Thursday, with all three indexes gaining at least 1 percent,
as retailers posted stronger-than-expected May sales,
including Dow component Wal-Mart, whose stock shot up to a
four-year high.
Another blue chip, Verizon Communications <VZ.N>, jumped
sharply after Verizon Wireless said it will acquire rural
mobile telecom provider Alltel Corp.
Business-oriented technology stocks responded strongly to
data showing the number of U.S. workers filing new jobless
benefit claims last week fell more than economists' forecasts.
Economists had expected an increase in unemployment claims.
"Looks like the combination of factors were enough to give
the market a nice lift," said Fred Dickson, market strategist
at D.A. Davidson & Co in Lake Oswego, Oregon. Retail sales
were "obviously helped by government stimulus checks that have
hit the public."
The Dow Jones industrial average <> was up 186.29
points, or 1.50 percent, at 12,576.77. The Standard & Poor's
500 Index <.SPX> was up 20.00 points, or 1.45 percent, at
1,397.20. The Nasdaq Composite Index <> was up 38.64
points, or 1.54 percent, at 2,541.78.
Shares of Microsoft Corp <MSFT.O> rose 2.2 percent to
$28.15 while network equipment maker Cisco Systems Inc
<CSCO.O> gained 3.1 percent to $27.57.
Wal-Mart Stores Inc <WMT.N>, the world's No. 1 retailer,
gave the Dow its biggest boost as it hit a 4-year high after
reporting that it had seen some benefits from the tax rebate
checks consumers began receiving in May. Wal-Mart's stock rose
3.5 percent to $59.68 and earlier climbed as high as $59.90, a
level not seen since 2004.
Shares of Costco Wholesale Corp <COST.O> gave a boost to
the Nasdaq, rising 3.5 percent to $73.25 after the warehouse
club, like Wal-Mart, posted more robust sales than expected
despite rising gasoline prices.
In the telecom sector, Verizon shares surged 6.7 percent
to $39.45 on the NYSE.
Lehman Brothers upgraded the U.S. airline sector, saying
industry restructuring was coming at an accelerated pace. UAL
<UAUA.O>, the parent of United Airlines, soared 11.8 percent
to $10.22 on Nasdaq. Northwest Airlines Corp <NWA.N> advanced
15.1 percent to $8.07 on the NYSE.
Several airlines are reducing work forces and domestic
fleets as the industry grapples with soaring fuel costs and a
weakening economy.
Continental Airlines Inc <CAL.N> rose more than 6 percent
to $15.40 after it said on Thursday it would cut 3,000 jobs,
or about 6.5 percent of its work force, and retire 67 older
planes as it scales down in the face of record fuel prices.
Oil rose $2.08 to $124.38 a barrel on Thursday, helping to
prop up energy stocks. Exxon Mobil <XOM.N> was the
biggest-weighted gainer in the S&P 500, rising 2.5 percent to
$87.91, while shares of rival Chevron Corp <CVX.N> gained 2.6
percent to $98.53.
(Additional reporting by Deborah Lee; Editing by Jan
Paschal)
