July 13, 2024

Optimism Pushes Dow to Best Week in 2 Years

The rally started Monday after Nike reported strong quarterly results. Revenue that beat analysts’ predictions indicated that shoppers were still splurging on more expensive sneakers and sportswear, despite the recent run-up in gas prices. On Thursday, Greece cleared its final hurdle before it receives its next round of loans to avoid defaulting on its debt. The same day, a report showed that manufacturing in the Chicago region had picked up unexpectedly.

A report on Friday from the Institute for Supply Management showed that manufacturing across the country had expanded, reinforcing the growing perception that the slowdown was temporary. The Federal Reserve chairman, Ben S. Bernanke, and a number of prominent economists have argued that the economy will pick up again once the effects of the Japan disaster waned and high gas prices recede.

Many economists and analysts began lowering their estimates for growth in May after a string of negative reports on manufacturing, consumer spending and hiring by private companies. A shortage of computer chips and auto parts from Japan, higher gas prices and severe weather in the South all contributed to what appeared to be a slowdown in the economic recovery. Stocks lost most of their gains for the year by mid-June.

Todd Salamone, an investment strategist at Schaeffer’s Investment Research, said the recent surge in stocks represented an “unwinding of the tremendous negativity that built up over the past few weeks.”

The Dow Jones industrial average rose 168.43 points, or 1.36 percent, to 12,582.77, on Friday. The Standard and Poor’s 500-stock index gained 19.03 points, or 1.44 percent, to 1,339.67. The Nasdaq composite added 42.51 points, or 1.53 percent, to 2,816.03.

All 30 stocks in the Dow index rose Friday. Companies that do well during times of economic expansion led the index. Alcoa and Caterpillar each gained more than 2 percent.

It was the fourth time this week that the Dow gained more than 100 points. The Dow’s 648-point gain for the week is its largest since the bull market began in March 2009. It is up 8.68 percent for the year, about 2 percent below its April high. The S. P. is up 6.52 percent for the year. It had been up as high as 8.4 percent.

A rebound in automobile sales also helped send stock indexes higher on Friday. General Motors and Ford both said their sales rose 10 percent over this time last year. Car companies have been forced to slow the production of some models because of the shortage of parts after the earthquake and tsunami in Japan.

Honda and Toyota said recently that their North American production was beginning to return to normal. That has helped push the national manufacturing index higher. The Institute for Supply Management’s index rose to 55.3 in June from 53.5 the month before, on a scale in which a number above 50 indicates growth.

Among United States companies, the for-profit education company Apollo Group rose 6 percent despite a steep drop in student enrollment. The company’s profits fell, but not as much as analysts had predicted. Darden Restaurants, the parent company of Red Lobster and the Olive Garden, also rose 6 percent after reporting that sales rose in all of its divisions. And Eastman Kodak lost 14 percent after a judge threw out some of its claims in a trade dispute with Apple and Research in Motion.

The Treasury’s 10-year note fell 6/32, to 99 17/32, and the yield rose to 3.18 percent, from 3.16 percent late Thursday.

Article source: http://feeds.nytimes.com/click.phdo?i=af96236f98ee2a517471a2c308a2243c

Speak Your Mind