* Financials up after John Paulson discloses stakes
* Retail sector overall lower after weak retail sales
* Stocks up: S&P 0.14 pct, Dow 0.33 pct, Nasdaq 0.33 pct (Updates to midday, changes quote)
By Angela Moon
NEW YORK, Aug 13 (Reuters) - U.S. stocks rose on Thursday as better-than-expected earnings by Wal-Mart Stores Inc offset gloomy government reports on retail sales and employment.
Financial stocks were strong a day after hedge fund manager John Paulson disclosed that he had bought large stakes in several banks, including Bank of America Corp.
Wal-Mart Stores Inc, the world's largest retailer, was up 1.6 percent to $51.34.
The retail sector, however, was largely lower after the U.S. Commerce Department reported total retail sales fell 0.1 percent in July, below a market forecast.
"It's a good day for Wal-Mart. ... (It) is more of an outlier than an indicator of the group's sentiment today," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.
Department store chain Kohl's Corp fell 1.8 percent to $51.35 after reporting a quarterly outlook that was below Wall Street's forecasts. The S&P consumer discretionary sector index was down 1.3 percent.
In the tech-heavy Nasdaq index, Apple Inc led gains, up 1.3 percent to $167.40 after Barclays Capital raised its share price target, citing an upbeat long-term outlook for the company.
The Dow Jones industrial average was up 13.53 points, or 0.14 percent, at 9,375.14. The Standard & Poor's 500 Index was up 3.30 points, or 0.33 percent, at 1,009.20. The Nasdaq Composite Index was up 6.61 points, or 0.33 percent, at 2,005.33.
Financial shares were broadly higher, with the S&P financial index up 1.7 percent a day after hedge fund manager Paulson, who made a fortune betting against financial companies after foreseeing the credit crisis, disclosed investments in banks.
Paulson said he bought 168 million shares of Bank of America in the second quarter, making him its fourth largest shareholder. Bank of America's shares rose 4.7 percent to $16.68.
Paulson also said in a regulatory filing that he holds 35 million shares of Regions Financial Corp, making him the second largest shareholder in the Southeast bank. Regions' shares gained 7.68 percent to $5.19.
Homebuilder shares fell on a string of downgrades, with D.R. Horton Inc down 3.35 percent to $13.00 after Citigroup cut its rating to "sell" and cut its share price target.
KB Home also fell 1.8 percent to $17.95 after a downgrade by Raymond James.
Earlier in the day, the U.S. Labor Department reported a rise in the number of workers filing new claims for jobless benefits.
The S&P 500 index is now up 49 percent from its closing-low set on March 9. (Additional reporting by Caroline Valetkevitch; Editing by Leslie Adler)