Good news about hiring and spending at retail businesses helped send the stock market sharply higher on Thursday.
A pair of government reports offered investors more encouragement that the economic recovery would continue, even as Europe and Japan struggle. The Standard Poor’s 500-stock index rose 23.84 points, or 1.5 percent, to 1,636.36.
The Dow Jones industrial average rose 180.85 points, or 1.2 percent, to 15,176.08. The Nasdaq composite rose 44.94 points, or 1.3 percent, to 3,445.37.
The gains were broad. All 10 industry groups within the S. P. 500 rose, led by retailers and other consumer-discretionary companies. Gannett, the media company, rose 34 percent, the most in the S. P. 500, after it said it would buy another media company, Belo, based in Dallas.
“The underlying fundamentals of our economy are clearly doing much better,” said Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Mass.
Markets have been turbulent over the last three weeks. The S. P. 500 rose 17 percent from the start of the year to May 21 when it hit a high of 1,669. The index began sliding the next day after the Federal Reserve said it would consider pulling back its support for the economy this year.
Since then, the index has fallen as low as 1,608, a trading range of 3.7 percent.
Investors have been debating when the Fed will begin slowing its bond purchases, and they have been worrying about the results. They could get a better sense on Wednesday, when the bank releases its policy statement and when the Fed’s chairman, Ben S. Bernanke, holds another news conference.
“A lot of investors are worried about the Fed,” said Robert F. Baur, chief global economist at Principal Global Investors in Des Moines. “That’s going to create a bumpy market, at least until they get some clarity on that. But we really think the U.S. is in pretty good shape.”
Mr. Baur said he thought the economic recovery would pick up speed later this year, which could help push corporate earnings and the stock market higher.
The latest positive news came early Thursday when the government said the number of Americans seeking unemployment benefits fell 12,000, to 334,000, below what economists had expected. Jim O’Sullivan, chief United States economist at High Frequency Economics, wrote in a note to clients that the government’s weekly numbers, while volatile, “continue to signal an improving labor market.”
The government also reported that retail sales increased 0.6 percent in May from April. That was up from a 0.1 percent gain in April and the fastest pace since February.
Some investors, like Anton Bayer, the chief executive of Up Capital Management in Granite Bay, Calif., say financial markets will falter when the Fed and other central banks begin to pump less money into the system. The Fed has artificially propped up the economy, he said, which is why investors are nervous about what will happen when the central bank starts buying fewer bonds every month.
“What the markets are seeing is the economic engines are not being primed,” Mr. Bayer said. “The fear is of the stimulus going away and exposing an economy that is not really chugging along. It’s the big risk.”
The 10-year Treasury note rose 22/32 to 96 15/32, with the yield dropping to 2.15 percent from 2.23 percent late Wednesday.
In Japan, the benchmark Nikkei 225 index slumped 6.4 percent as doubts grew that Prime Minister Shinzo Abe’s economic turnaround plan would succeed. The Japanese market is down 20 percent from a high reached on May 22, the definition of a bear market.
Article source: http://www.nytimes.com/2013/06/14/business/daily-stock-market-activity.html?partner=rss&emc=rss
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