Stocks rose on Thursday after investors recovered from a pessimistic report on federal budget talks and were cheered by reports on economic growth and unemployment claims.
Stock rose and fell in tandem with the tenor of remarks from Washington. The Dow was up as much as 77 points in morning trading, but it turned negative when House Speaker John Boehner reported little progress in budget talks. Stocks recovered slowly in afternoon trading.
The Dow Jones industrial average finished with a gain of 36.71 points, or 0.28 percent, at 13,021.82. The Standard Poor’s 500-stock index rose 6.02 points, or 0.43 percent, to 1,415.95. The Nasdaq composite index gained 20.25 points, or 0.68 percent, to 3,012.03.
After meeting with Treasury Secretary Timothy F. Geithner, Mr. Boehner told reporters that Democrats had yet to say which cuts to government benefit programs they would accept, suggesting that a final budget deal was not close. Republicans have said they are open to increasing taxes but only if that is met by significant cuts to spending.
Investors have been closely watching the talks between the White House and Congress over the spending cuts and tax increases that are scheduled to start on Jan. 1 unless a deal is reached to cut the budget deficit.
“It’s a headline-watching market with this fiscal cliff,” David Brown, the chief market strategist at the investment research firm Sabrient Systems, said, referring to the combined tax increases and spending cuts.
Mr. Brown said the continuing negotiations were likely to cause the stock market to take sudden turns in the weeks ahead. “But things seem to be moving in the right direction,” he said. “I don’t think either party wants to get pinned with hurting the market or the economy.”
Economists have forecast that tax increases and spending cuts will push the economy back into recession.
Stock in Guess, a clothing maker, gained 49 cents to close at $25.74 after it joined the ranks of companies pledging special dividends to shareholders before favorable tax rates on dividends expire at the end of the year.
Dividends, now taxed at 15 percent, will be treated like ordinary income next year unless Congress and the White House extend current tax breaks as part of a budget deal.
The Commerce Department raised its estimate for economic growth to an annual rate of 2.7 percent in the July-through-September period from the 2 percent rate estimated a month ago. The estimate was 1.3 percent rate in the three previous months.
The Labor Department also reported that the number of Americans applying for unemployment benefits for the first time fell to 393,000 last week, in line with economists’ expectations. It was the second consecutive drop after Hurricane Sandy drove applications higher this month.
Target, Gap and other retail stores posted poor sales numbers, driving their stocks lower. Kohl’s reported a decline in sales and fell 12 percent to lead decliners in the S. P. 500. Kroger, the supermarket chain, rose $1.19 to $26.25 after reporting stronger quarterly profits and raising its earnings outlook for the year.
Interest rates were lower on Thursday. The Treasury’s benchmark 10-year note rose 4/32, to 100 2/32, and the yield slipped to 1.61 percent from 1.63 percent late on Wednesday.
Article source: http://www.nytimes.com/2012/11/30/business/daily-stock-market-activity.html?partner=rss&emc=rss
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