US STOCKS-Wall St rises modestly on home sales lift

Fri May 23, 2014 12:02pm EDT

* HP gains after results, job cut plans

* Aeropostale plunges after outlook

* New home sales rebound

* PTC shares soar on EU backing for muscular dystrophy drug

* Indexes up: Dow 0.31 pct, S&P 0.32 pct, Nasdaq 0.43 pct (Updates to midday, adds housing stocks)

By Chuck Mikolajczak

NEW YORK, May 23 (Reuters) - U.S. stocks rose modestly on Friday, after a better-than-expected reading on the housing market, with the S&P on track to set a new record closing high.

Sales of new U.S. single-family homes rose more than expected in April and the supply of houses on the market hit a 3-1/2 year high. The PHLX housing sector index rose 1.4 percent, with homebuilders Lennar Corp up 3 percent to $40.14 and D.R. Horton advancing 1.9 percent to $23.08.

The S&P is 0.2 percent from its record intraday high of 1,902.17 set on May 13 and is above its record closing high of 1,897.45 the same day. The index has been range-bound between the highs and its 50-day moving average as investors have been unsure of the pace of the economic recovery.

The CBOE Volatility index touched 11.46, its lowest level since March 2013, reflecting a lack of nervousness among investors.

"You've got some technical resistance, you've had a nice little bounce here, earnings season is largely done, it was pretty good, the economic growth has bounced nicely coming out of the winter, so that's pretty good," said Phil Orlando, chief equity market strategist at Federated Investors, in New York.

"There's a lot of complacency in the market at a point where the market has had a nice little bounce back into the 1,900 area."

The Dow Jones industrial average rose 51.69 points or 0.31 percent, to 16,594.77, the S&P 500 gained 6.11 points or 0.32 percent, to 1,898.6 and the Nasdaq Composite added 17.94 points or 0.43 percent, to 4,172.28.

Volume is expected to be light Friday ahead of an extended holiday weekend with Wall Street closed Monday for Memorial Day.

Hewlett-Packard Co jumped 5.8 percent to $33.63 as the best performer on the S&P 500. It may cut as many as 16,000 more jobs in a major ramp-up of CEO Meg Whitman's years-long effort to turn around the personal computer maker and relieve pressure on its profit margins.

Aeropostale tumbled 24.3 percent to $3.42 after the teen apparel retailer forecast a bigger-than-expected loss for the current quarter.

PTC Therapeutics shares surged 56.2 percent to $23.93 after European regulators recommended a conditional marketing authorization for the biotech company's drug for Duchenne muscular dystrophy. (Additional reporting by Herb Lash; Editing by Bernadette Baum and Nick Zieminski)

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