NEW YORK - Encouraging signs on the first day of spring that the economy is emerging from a winter slumber drove stocks higher a day after the market dipped on concern that the Federal Reserve would raise interest rates sooner than investors anticipated.
The Standard & Poor’s 500 index rose 11.24 points, or 0.6 percent, to 1,872.01. The Dow Jones industrial average gained 108.88 points, or 0.7 percent, to 16,331.05. The Nasdaq composite climbed 11.68 points, or 0.3 percent, to 4,319.29.
The S&P 500 came within a fraction of a point of wiping out all of its losses from a day earlier, when it dropped 11.48 points.
The stock market has become more volatile this year as Fed policymakers have started reducing their economic stimulus, and investors have fretted about whether the economy is strong enough to maintain its recovery without the central bank’s support.
“The economy is likely to have a good bounce in the springtime,” said Peter Cardillo, chief market economist at Rockwell Global Capital. “The market is reacting to the good economic news.”
Stocks started the day lower as investors considered Wednesday’s comments from Fed Chairman Janet Yellen, who set the stage for a possible interest rate increase by the middle of next year. The Fed on Wednesday also dropped its previous position that it would consider raising interest rates once the unemployment rate fell to 6.5 percent. The nation’s unemployment rate in February was 6.7 percent.
Higher interest rates could slow the economy by raising the cost of borrowing. That could hold companies back from borrowing to expand their businesses or discourage consumers from taking out loans such as mortgages.
The market turned higher in midmorning trading after news that a measure of the U.S. economy’s health rose in February by the largest amount in three months. That suggests growth will accelerate after a severe winter.
The Conference Board’s index of leading indicators increased 0.5 percent after a slight 0.1 percent rise in January and a 0.1 percent decline in December.
The Federal Reserve Bank of Philadelphia said separately that manufacturing rebounded in that region in March as new orders increased.
Microsoft was among the big gainers Thursday. The software company’s stock climbed $1.06, or 2.7 percent, to $40.33 after analysts at Morgan Stanley said a rumored plan to make a version of its Office software available for iPad devices could generate $1.2 billion in annual revenue.
3-D printing companies were among the losers after ExOne reported a fourth-quarter loss late Wednesday and said its revenue fell. ExOne slid $4.35, or 10 percent, to $39.40. Other 3-D-printer companies, including Stratasys and 3D Systems, also fell.
The stock market is in the sixth year of a bull market and has risen 172 percent since March 2009. That rise has been underwritten by the Fed’s stimulus, which has strengthened the economy by keeping interest rates low.
As the Fed cuts back on its stimulus, investors are splitting into roughly two camps, said Omar Aguilar, chief investment officer at Charles Schwab.
“You have those [who] believe that the only reason the market has gone up for the last five years is because of the stimulus program … that is clearly coming to an end,” said Aguilar. “Other investors think that the economy is in good shape.”
Bond prices were little changed a day after the Fed announced it would make further reductions to its bond-buying program.
The yield on the 10-year government was unchanged from Wednesday at 2.77 percent.
The price of crude oil fell 94 cents, or 0.9 percent, to $99.43 a barrel. Gold dropped $10.80, or 0.8 percent, to $1,330.50 an ounce.
Business, Pages 28 on 03/21/2014