4 economic reports buoy markets

Wednesday, June 26, 2013

NEW YORK - Wall Street focused on the economy instead of the Federal Reserve on Tuesday, sending stocks higher.

Four reports showed a brightening U.S. economy. Housing and manufacturing continued to improve, and consumer confidence hit its highest level in 5 ½ years.

The major U.S. stock indexes closed higher, with the Dow Jones industrial average shooting up 100.75 points, or 0.7 percent, to 14,760.31. The Standard & Poor’s index rose 14.94 points, or 1 percent, to 1,588.03. The Nasdaq rose 27.13 to 33,47.89.

The gains were broad. Four stocks rose for every one that fell on the New York Stock Exchange. Consolidated volume was average at 3.6 billion shares.

The triple-digit rise in the Dow continues a bout of market volatility caused by investors and traders who are worried about the Fed ending its economic stimulus. Last Wednesday, Fed Chairman Ben Bernanke said he expects the Fed to end its bond buying by the middle of 2014 if it feels the economy can manage without that stimulus.

The Dow then plunged by triple digits on three of the next four trading days, with investors worried that the market would struggle without the Fed propping it up.

Some investors have concluded that the recent sell-offs were overblown. Quincy Krosby, a market strategist at Prudential Financial, guessed that shorter-term traders were the ones buying stocks Tuesday because they judged that parts of the market were “oversold.”

Long-term investors are likely still sitting on the sidelines, waiting for further signs that markets are becoming less volatile, she said.

Among the biggest gainers were big dividend payers like phone and power companies. These are stocks that have been hit the hardest by the recent sell-off.

Ben Schwartz, chief market strategist at Lightspeed Financial in Chicago, described Tuesday as a day for the market to stabilize after the recent big plunges. But he predicted that the market could be volatile for the rest of the year, and others said they thought the stock indexes had already reached their high points.

The fact that the second quarter ends Friday will also likely complicate the market’s performance this week. Money managers may pull out because they need to book gains for clients.

The stronger economic news for the U.S. led investors to sell U.S. government bonds, a sign that they’re more comfortable putting money in stocks. The yield on the 10-year Treasury note, a benchmark for many types of loans, rose to 2.6 percent from 2.54 percent late Monday. That’s part of a longer-term trend: Investors have been selling bonds in anticipation of the Fed winding down its bond-buying program.

The price of gold slipped $2 to $1,275.10 an ounce, and the price of crude oil rose 14 cents to $95.32 a barrel.

Shares of Walgreen, the nation’s largest drugstore chain, slipped after reporting earnings and revenue that missed analysts’ expectations. Walgreen’s stock fell $2.83, or nearly 6 percent, to $45.22.

Information for this article was contributed by Steve Rothwell of The Associated Press.

Business, Pages 26 on 06/26/2013