Economic Reports Push Markets Higher

Encouraging news about the American economy helped push stock prices higher on Wall Street Friday.

In afternoon trading the Standard Poor’s 500-stock index rose 0.5 percent. The Dow Jones industrial index gained 0.4 percent and the Nasdaq composite rose 0.5 percent.

A gauge of future economic activity rose more than analysts had expected, as did a measure of consumer confidence, adding to evidence that the economy is maintaining a steady recovery.

Stocks have surged to record levels this year on optimism about the economy and record corporate earnings. The market is also being supported by ongoing stimulus from the Federal Reserve, which is keeping long-term borrowing costs at historically low levels.

“This slow but relatively steady growth, that keeps inflation in check and keeps interest rates low, is actually a pretty healthy environment for the stock market,” said Liz Ann Sonders, chief investment strategist at Charles Schwab Company. “Right now we are very optimistic.”

Gold fell for a seventh straight day, dropping $26, or 1.9 percent, to $1,361.10 an ounce. The precious metal is down almost 20 percent this year and has fallen out of favor as an alternative investment as the stock market has surged this year.

The demand for gold is also being undermined by a surge in the United States dollar. The dollar advanced against both the euro and the yen Friday.

General Motors rose 3.4 percent, to $33.48. The automaker’s stock is trading above the $33 price of its November 2010 initial public offering for the first time in two years.

Northrop Grumman gained 3.5 percent after the defense contractor said its board approved the repurchase of another $4 billion in stock, and that it plans to buy back a quarter of its outstanding shares by the end of 2015.

After some lackluster reports on the economy Thursday, including slowing manufacturing and an increase in applications for unemployment benefits, Friday’s reports were a tonic for investors.

The Conference Board said its index of leading economic indicators rose 0.6 percent last month after a revised decline of 0.2 percent in March. The index is intended to predict how the economy will be doing in three to six months.

The University of Michigan’s survey of consumer confidence climbed to 83.7. Economists had predicted that the gauge would climb to 76.8.

As well as giving stocks a lift, the reports also pushed government bond yields higher. The yield on the 10-year Treasury rose to 1.91 percent from 1.88 percent Thursday as investors favored riskier assets.

The price of benchmark crude oil rose 93 cents, or 1 percent, to $96.09 a barrel.

In Europe Britain’s FTSE ended the session 0.5 percent higher, Germany’s DAX climbed 0.3 percent and France’s CAC-40 was up 0.6 percent.

Earlier in Asia, Japan’s Nikkei 225 index rose 0.7 percent at the close, reversing a lower open. Australia’s SP/ASX 200 added 0.3 percent, pushed up by gains in BHP Billiton, the world’s largest mining company. The stock rose 1.9 percent on bargain-hunting.

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Article source: http://www.nytimes.com/2013/05/18/business/daily-stock-market-activity.html?partner=rss&emc=rss