NEW YORK - Better news on jobs and consumer spending pushed stocks higher Thursday.
The Dow Jones industrial average and the Standard & Poor’s 500 index rose for a third straight day. Bond yields fell for a second day, easing worries that a sudden spike in interest rates could hurt the economy.
The Dow closed up 114.35 points, or 0.8 percent, to 15,024.49. The S&P 500 index climbed 9.94 points, or 0.6 percent, to 1,613.20. The Nasdaq composite rose 25.64 points, or 0.8 percent, to 3,401.86.
Five stocks rose for every one that fell on the New York Stock Exchange. Consolidated volume was lighter than average, 3.3 billion shares.
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.
Stocks have rallied since Tuesday as investors took advantage of lower prices after a sell-off that lasted till Monday. 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 Dow sank 560 points over Wednesday and Thursday of last week. Even with the gains this week the index is still 293 points below where it was June 18, the day before the Fed laid out its plans for how it might wind down its stimulus.
The central bank is buying$85 billion in bonds every month to hold down long-term interest rates and encourage borrowing and spending. Fed 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.”
In a sign that investors were once again more confident in holding riskier assets, the Russell 2000 index of small-company stocks rose 16.09 points, or 1.7 percent, to 979.92, more than twice as much as the rest of the market.
The yield on the 10-year Treasury note fell to 2.48 percent from 2.54 percent late Wednesday. The yield climbed as high 2.66 percent on Monday, the 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.
Higher yields on Treasury bonds translate into 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, the Federal Home Loan Mortgage Corp., 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.
Business, Pages 26 on 06/28/2013