Dow Jones ended the day higher, giving stocks an even bigger boost during this bullish run
NEW YORK (AP) — Encouraging news about the U.S. economy extended the stock market’s rally Friday.
gauge of future economic activity rose more than analysts had expected,
as did a measure of consumer confidence, adding to evidence that the
economy is steadily recovering.
Stocks are on track to close
higher for a fourth straight week. Indexes are at record levels after
surging this year on optimism about the economy and record corporate
earnings. The market is also being supported by ongoing stimulus from
the Federal Reserve, which is keeping long-term borrowing costs at
historically low levels.
“This slow but relatively steady growth,
that keeps inflation in check and keeps interest rates low, is actually a
pretty healthy environment for the stock market,” said Liz Ann Sonders,
chief investment strategist at Charles Schwab Co. “Right now we
are very optimistic.”
General Motors rose $1.29, or 4 percent, to
$33.68. The automaker’s stock is trading above the $33 price of its
November, 2010 initial public offering for the first time in two years.
Grumman gained $2.71, or 3.4 percent, to $81.77 after the defense
contractor said its board approved the repurchase of another $4 billion
in stock, and that it plans to buy back a quarter of its outstanding
shares by the end of 2015.
The Dow Jones industrial average rose
121 points, or 0.8 percent, to 15,354 as of 3:38 p.m. Eastern Daylight
Time. The index is up 1.6 percent this week and 17 percent for the year.
Standard Poor’ 500 index climbed 16 points, or 0.9 percent, to
1,667. The gauge is up 2 percent this week and has gained 16.9 percent
After some lackluster reports on the economy Thursday,
including slowing manufacturing and an increase in applications for
unemployment benefits, Friday’s reports were a tonic for investors.
Conference Board said its index of leading economic indicators rose 0.6
percent last month after a revised decline of 0.2 percent in March. The
index is intended to predict how the economy will be doing in three to
The University of Michigan’s preliminary survey of
consumer confidence climbed to 83.7. Economists had predicted that the
gauge would climb to 76.8.
The strength of the rally in stocks has
taken many by surprise, leaving investors waiting for a drop in prices
to get into the market, said Jim Anderson, an investment specialist at
JPMorgan. The SP 500 index hasn’t fallen for two consecutive days
for a month.
“Everyone is waiting for a pullback,” Anderson said.
“Every client asks me, ‘When are we getting a pullback?’ With so many
people waiting for it, and pouncing on it when it arrives, it’s over so
As well as giving stocks a lift, the positive economic
reports also pushed government bond yields higher. The yield on the
10-year Treasury rose to 1.95 percent from 1.88 percent Thursday as
investors favored riskier assets.
The yield, which moves inversely
to its prices, has jumped since May 3 after the government reported
that hiring picked up sharply in April. The note started trading that
day at 1.63 percent, its low for the year.
The move to riskier
assets also gave small stocks a lift. The Russell 2000, an index of
smaller companies, rose 1 percent to 995. The index has surged this
month and is performing better than both the Dow and the SP 500 for
the year. It’s up 17.2 percent so far in 2013.
Small stocks are
doing well partly because they are more focused on the U.S., which is
recovering, and don’t rely as much on sales from recession-plagued
Europe, as larger companies do.
Gold fell for a seventh straight
day, dropping $22.20, or 1.6 percent, to $1,364 an ounce. The precious
metal is down almost 20 percent this year and has fallen out of favor as
an alternative investment as the stock market has surged this year.
demand for gold as an alternative asset is also being undermined by a
recent surge in the U.S. dollar. The U.S. currency advanced against both
the euro and the yen Friday. The ICE dollar index, which measures the
strength of the U.S. currency against a group of six currencies, is at
its highest in two years.
The price of oil rose 86 cents, or 0.9 percent, to $96.02 a barrel.
Nasdaq composite climbed 30 points, or 0.9 percent, to 3,495. The
technology-heavy stock index got a small boost from Facebook, which
climbed 19 cents, or 0.7 percent, to $26.31 on the one-year anniversary
of its initial public offering.
Facebook slumped in the first four
months after its market debut on concern that it wasn’t doing enough to
develop mobile advertising. Despite recovering since then, it’s still
trading below its IPO price of $38.
Among other stocks making big moves;
J.C. Penney fell 75 cents, or 4 percent, to $18.03 after the retailer
reported a loss that was worse than analysts’ already dismal estimates.
The retailer is reeling from the fallout from a failed turnaround plan
orchestrated by its former CEO Ron Johnson, who was ousted last month
after less than a year and a half on the job.
— Autodesk fell
$2.88, or 7.2 percent, to $36.91, after the design software company
posted disappointing first-quarter results and lowered its forecasts for