Good economic reports, strong corporate earnings and fresh support from central banks have apparently eased investors’ concerns about another economic slowdown. Many had been on the lookout for signs of a spring swoon in the markets, as happened in each of the last three years.
Instead, the Dow has climbed almost 15 percent since Jan. 1, with other market indexes also showing strong gains.
“The thing that’s been driving stocks is rising confidence,” said James W. Paulsen, chief investment strategist at Wells Capital Management. “Economic growth, job creation and the housing market have been better than expected.”
A stronger-than-expected April employment report briefly propelled the Dow over 15,000 on Friday, but it ended the week below that mark.
The Dow industrials rose 87.31 points, or 0.6 percent, to close at 15,056.20. The Standard Poor’s 500-stock index added 8.46 points, or 0.5 percent, to 1,625.96. Both indexes first reached nominal highs earlier this year, then kept climbing.
“We don’t think people are giving enough credit to the strength of the economy,” said Ryan Detrick, a senior technical strategist at Schaeffer’s Investment Research. “We still like the market.”
The Nasdaq composite rose 3.66 points, or 0.1 percent, to 3,396.63. It still remains well below its nominal closing high of 5,048.62, reached during the dot-com boom in March 2000.
A report on Tuesday showed that consumer borrowing rose in March at its slowest pace in eight months. The Federal Reserve said borrowing rose $8 billion in March from February to a seasonally adjusted $2.81 trillion.
The increase was driven by more loans to attend school and buy cars. The category that measures those loans increased $9.7 billion to $19.6 trillion. A measure of credit card debt fell $1.7 billion to $846 billion, 17.2 percent below the peak of $1.02 trillion set in July 2008.
The stock market’s gains seem to have coincided with a growing belief among investors that the normal threats to rising stock prices — higher interest rates, falling profits, a possible recession — are unlikely to appear anytime soon. In any case, with interest rates near record lows, they see few other places to put their money.
Strong corporate profits have also been encouraging. More than 400 of the S. P. 500 companies have turned in first-quarter results, and more than seven out of 10 have beaten Wall Street’s expectations, according to SP Capital IQ. Those analysts estimated that earnings increased 5 percent in the first quarter and will improve through the rest of the year.
Among the stocks on the move, Fossil, a maker of watches and handbags, leapt $8.92, or 9 percent, to $107.88 after the company said higher sales had lifted its earnings.
DirecTV, the country’s largest provider of satellite TV services, surged $3.99, or 7 percent, to $61.95 after its earnings beat analysts’ expectations. The company reported more subscribers in the United States and Latin America.
In the bond market, interest rates edged higher. The price of the 10-year Treasury note slipped 5/32, to 101 31/32, while its yield rose to 1.78 percent from 1.76 percent late Monday. Yields increased over the last week, as traders shifted money out of the safety of the Treasury market. The yield on the 10-year note sank to its low for the year, 1.62 percent, on Thursday.
Article source: http://www.nytimes.com/2013/05/08/business/daily-stock-market-activity.html?partner=rss&emc=rss
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