» Subscribe Today!
The Power of Information
Home
The Ledger - EST. 1978 - Nashville Edition
X

Forgot your password?
Skip Navigation LinksHome > Article
VOL. 37 | NO. 25 | Friday, June 21, 2013




Stocks gain on encouraging news on economy

Print | Front Page | Email this story

NEW YORK (AP) — Better news on jobs and consumer spending pushed stocks higher Thursday.

The Dow Jones industrial average and the Standard & Poor's 500 index jumped, putting the stock market on track for its third advance in as many days. Bond yields fell for a second day, easing worries that a sudden spike in interest rates could hurt the economy.

Consumer spending rose 0.3 percent last month as incomes increased at the fastest pace in three months, the government reported. The number of Americans seeking unemployment benefits fell 9,000 to 346,000 last week. The report added to evidence that the job market is improving modestly.

The stock market has rallied since Tuesday as investors took advantage of lower prices after a sell-off last week. The plunge came after Federal Reserve Chairman Ben Bernanke said that the central bank could cut back on its stimulus later this year and possibly end it next year, if the economy continued to improve.

The central bank is buying $85 billion of bonds every month to hold down long-term interest rates and encourage borrowing and spending. Fed's stimulus has underpinned a stock market rally that started in March 2009 by encouraging investors to put money into risky assets.

"What's driving that market up is that people are realizing that they are in a 'win-win' situation," said Rick Robinson, a regional Chief Investment Officer at Wells Fargo Private Bank. "If you have good economic data that should be good for stocks, if you have poor economic data ... that means the Fed will probably have its (stimulus) longer."

The Dow Jones was up 121 points, or 0.8 percent, to 15,030 as of noon Eastern Daylight Time.

The S&P 500 index climbed 11 points, or 0.7 percent, to 1,617.

All 10 industry groups in the S&P 500 rose, led by telecommunications stocks. Those stocks, which have high dividends, have been beaten down in recent weeks as a sharp increase in Treasury yields since early May gave investors more alternatives for seeking income.

The yield on the 10-year Treasury note fell to 2.51 percent from 2.54 percent late Wednesday. The yield climbed as high 2.66 percent on Monday, its highest since August 2011. The rate has surged since May 3, when it touched its low for the year of 1.63 percent. Concern that the Fed is poised to start pulling back on its stimulus prompted investors to sell bonds, pushing the yield higher.

A higher yield on the note translates to higher borrowing costs on many kinds of loans including home mortgages. Average U.S. rates on fixed mortgages surged this week to their highest levels in two years. Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan jumped to 4.46 percent. That's up from 3.93 percent last week and the highest since July 2011.

Higher rates have yet to slow the housing market. Homebuilders got a lift from a report Thursday suggesting that the housing recovery remains intact. The number of people who signed contracts to buy U.S. homes jumped in May to the highest level in more than six years.

D.R. Horton rose 37 cents, or 1.8 percent, to $21.29. Lennar rose 93 cents, or 2.6 percent, to $36.93.

Investors were also encouraged by comments from a key Fed official. Federal Reserve Bank of New York President William Dudley said the central bank would likely keep buying bonds if the economy failed to grow at the pace the Fed was expecting.

"If labor market conditions and the economy's growth momentum were to be less favorable than in the (Fed's) outlook_and this is what has happened in recent years_I would expect that the asset purchases would continue at a higher pace for longer," Dudley said at a press briefing at the Fed.

In commodities trading, the price of oil rose $1.41, or 1.5 percent, to $96.90 a barrel. Gold rose $1 to $1,230 an ounce.

In other trading, the Nasdaq composite rose 27 points, or 0.8 percent, to 3,403.

The dollar fell against the euro and the Japanese yen.

Among stocks making big moves:

— ConAgra Foods rose $1.30, or 4 percent, to $34.68 after the company posted a quarterly profit that came in a penny above the expectations of Wall Street analysts. The maker of Chef Boyardee, Hebrew National and other packaged foods benefited from acquisitions and price cuts that helped increase sales. —Payroll processor Paychex fell $1.45, or 3.8 percent, to $36.53 after posting earnings that fell short of analysts' expectations. The company said profit for the three months through May 31 came in roughly flat at 34 cents per share. Analysts had expected earnings of 37 cents a share. — KB Home rose 54 cents, or 2.7 percent, to $20.43, after the homebuilder's second-quarter loss narrowed. The company continued to deliver more homes at higher prices as the real estate market strengthens.

Follow us on Facebook, Twitter & RSS:
Sign-Up For Our FREE email edition
Get the news first with our free weekly email
Name
Email  
TNLedger.com Knoxville Editon
RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 0 0 0
MORTGAGES 0 0 0
FORECLOSURE NOTICES 0 0 0
BUILDING PERMITS 0 0 0
BANKRUPTCIES 0 0 0
BUSINESS LICENSES 0 0 0
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0