September 22, 2023

Dow Closes Best Week Since January

Stocks rose broadly on Friday, giving the Dow Jones industrial average its best week since January.

The market got a lift from two economic reports, one showing that inflation remained tame in August and the other showing that Americans spent more at stores last month.

The Dow rose 75.42 points, or 0.5 percent, to close at 15,376.06. It closed up 3 percent for the week, its best five-day performance since the week ended Jan. 4.

Intel led the Dow higher, gaining 81 cents, or 3.6 percent, to $23.44. Analysts at Jefferies Company said Intel might be able to increase its sales with power-efficient chips.

The Standard Poor’s 500-stock index rose 4.57 points, or 0.3 percent, to 1,687.99. The Nasdaq composite index rose 6.22 points, or 0.2 percent, to 3,722.18.

In one of several economic reports on Friday, the Commerce Department reported that Americans increased their spending in August by 0.2 percent, , but that was half what economists expected.

The sales report was mixed. Shoppers spent more on cars, electronics and furniture, but they did not buy much else. The government also said that wholesale prices rose 0.3 percent last month. In the last year, prices gained only 1.4 percent, a sign that inflation has remained modest. Higher energy prices helped increase wholesale prices.

Investors were looking ahead to the Federal Reserve’s policy meeting on Tuesday and Wednesday, when the central bank is expected to decide the future of its monthly $85 billion bond-buying program.

Many investors say it will decide to cut its buying to about $75 or $80 billion a month.

The price of gold fell $22 to $1,308. 40 an ounce. Oil slipped 21 cents to $107.52 a barrel.

In the Treasury market, the price of the 10-year note rose 4/32, to 96 21/32, while its yield declined to 2.89 percent from 2.91 percent late Thursday.

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Tech Companies Lead S.&P. to New High

Technology companies led the Standard Poor’s 500-stock index to a new closing high on Monday.

The stock market has recovered all the ground it lost over the previous two weeks, when worries over slower economic growth, falling commodity prices and disappointing quarterly earnings battered financial markets.

The S. P. 500 index rose 11.37 points, to close at 1,593.61. The 0.7 percent increase nudged the index above its previous closing high of 1,593.36, reached on April 11.

“The market has had a terrific run,” said Philip Orlando, chief equity strategist at Federated Investors, noting that the S. P. 500 is up 12 percent since the start of 2013. “At the beginning of the year, I thought we were going to 1,660,” he said, referring to all of 2013. “We’re only about 5 percent from that.”

A pair of economic reports encouraged buying. Wages and spending rose in the United States last month, and pending home sales hit their highest level in three years.

The Dow Jones industrial average gained 106.20 points, to 14,818.75, up 0.7 percent. Microsoft and I.B.M. were among the Dow’s best performers, rising more than 2 percent each. I.B.M. alone accounted for a third of the Dow’s increase. The index is just 46 points below its own nominal high of 14,865 reached on April 11.

Technology’s popularity on Monday was a change from earlier this month, when it lagged the rest of the market. Concerns about weak business spending and slower overseas sales have cast a shadow over big tech firms, said Marty Leclerc, the managing partner of Barrack Yard Advisors, an investment firm in Bryn Mawr, Pa.

Revenue misses from I.B.M. and other big companies have highlighted the technology industry’s vulnerability to the world economy. But Mr. Leclerc says he thinks companies with steady revenue and plenty of cash look appealing over the long term.

Information technology stocks rose the most of the 10 industry groups in the S. P. on Monday, up 1.6 percent. It is the only group that remains lower over the last year, down 2 percent, against the S..P’s gain of 14 percent.

The Nasdaq composite rose 27.76 points to 3,307.02, an increase of 0.9 percent. Apple, the biggest stock in the index, surged 3 percent to $430.12.

The number of Americans who signed contracts to buy homes reached the highest level since April 2010, according to the National Association of Realtors. Back then, a tax credit for buying houses lifted sales. In a separate report, the government said Americans’ spending and income both edged up last month.

A handful of companies reported earnings on Monday. The Eaton Corporation’s quarterly net income beat Wall Street estimates, helped by its acquisition of Cooper Industries, an electrical equipment supplier, though its revenue fell short. Eaton shares climbed 3 percent to $60.28.

Eaton’s results followed a larger pattern this earnings season. Of the 274 companies that have turned in results, seven of 10 have beaten analysts’ estimates for earnings, according to SP Capital IQ. But when it comes to revenue, six of 10 have missed estimates. The divergence suggests companies are squeezing more profits out of cost-cutting, instead of higher sales.

McGraw-Hill, the parent company of Moody’s and Standard Poor’s, surged after news that the ratings agencies had settled lawsuits dating back to the financial crisis that accused them of concealing risky investments. McGraw-Hill gained 3 percent to $53.45, while Moody’s jumped 8 percent to $59.69, the biggest gain in the S. P. 500.

In the market for government bonds, the price of the benchmark 10-year Treasury note was barely changed, falling 1/32 from Friday to 103, while its yield was even at 1.67 percent.

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Markets, Uneasy Over Economic Data, Continue to Fall

Wall Street lost ground for a second day on Thursday after weak economic reports, reflecting continued investor concern about the Federal Reserve’s resolve to keep bolstering the economy.

Signaling that the labor market remains in a slow recovery, the government said more people applied for unemployment benefits last week. The four-week average, a less volatile measure, rose to the highest in six weeks.

The Dow Jones industrial average fell 46.92 points, or 0.3 percent, to close at 13,880.62.

The Standard Poor’s 500-stock index dropped 9.53 points, or 0.6 percent, to 1,502.42, setting it on a path for its first weekly loss of the year. The Nasdaq composite index lost 32.92 points, or 1 percent, to 3,131.49.

The stock market indexes have climbed this year to the highest levels since the financial crisis, but Wall Street may be ready to retreat, said Kim Caughey Forrest, senior analyst with Fort Pitt Capital Group, a portfolio management firm.

”I think the market has gotten ahead of itself,” she said. She said fourth-quarter earnings had generally met expectations, but only after those expectations were reduced because of dire projections companies made in November and December.

Wal-Mart Stores rose $1.05, or 1.5 percent, to $70.26 after beating analysts’ profit forecasts in the fourth quarter. However, the company, the nation’s largest retailer, warned of a slow start to the year.

After a strong start to the holiday season, Wal-Mart Stores said, the first three weeks of December were weak, and business has been volatile since then. The company attributed some of the weakness to a delay in tax refund checks that have left people short of cash. Walmart customers also have less money to spend because a temporary payroll tax cut expired in December.

“Everybody’s gotten a 2 percent pay cut, and people who file their taxes early are not getting a refund back in a timely manner,” Ms. Forrest said.

The Safeway supermarket chain was the biggest gainer in the S. P. 500, rising $2.84, or 14.1 percent, to $22.97, after it said its net income jumped 13 percent in the fourth quarter, helped by higher gift and prepaid card revenue.

Tesla Motors plunged a day after reporting that its fourth-quarter net loss grew 10 percent on costs related to production of its new Model S electric car. The stock fell $3.38, or 8.8 percent, to $35.16.

Earlier, Asian and European stocks had closed sharply lower. The sell-off began Wednesday afternoon in New York after minutes from the Fed’s latest meeting were released. The account showed that some policy makers want to wind down bond purchases and other measures aimed at bolstering the economy.

The account also revealed new divisions over the Fed’s low-interest rate policies. There is no sign of inflation, yet there was more evidence that some Fed officials are ready to ease off the stimulus programs before the economy has fully recovered.

“Thinking maybe interest rates will creep higher, this is a very chilling scenario” for the market, Ms. Forrest said.

Interest rates, however, slipped on Thursday as demand increased for safer assets than stocks. The price of the Treasury’s 10-year note rose 11/32, to 100 88/32, while its yield fell to 1.97 percent from 2.01 percent late Wednesday.

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Economic Reports Help Shares Gain Ground

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.

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Wall Street Edges Back

The Dow Jones industrial average finished down 0.31 points at 12,815.08, as of 6 p.m. Monday. The closing level of the Dow was revised several times after trading closed. The New York Stock Exchange experienced a trading glitch during the day, forcing it to alter its normal procedure for determining the closing prices of some stocks.

The Dow spent the day alternating from small gains to losses, never rising more than 46 points or falling more than 32.

The Standard Poor’s 500-stock index edged up 0.18 points to 1,380.03. The Nasdaq composite fell 0.61, to 2,904.26.

Trading was light. The federal government and the American bond market were closed for Veterans Day, and no economic reports were released.

Federal spending cuts and tax increases are scheduled to begin with the new year, unless a divided Congress and the White House can find a compromise.

Some traders thought the tentative trading action was inevitable, because there has been no positive or negative news about the economy or the possibility of a deal to avoid the spending cuts and tax increases.

“Nothing good is going on,” said Scott Freeze, president of Street One Financial in Huntingdon Valley, Pa. “Everything forward-looking remains dreary.”

Last week, after voters returned a long-deadlocked and divided government to Washington, the Dow dropped 434 points in two days and had one of its worst weeks of the year.

Even if lawmakers work out a compromise, as they usually do, the political fight until then is sure keep investors on edge, pitching the stock market back and forth until the matter is resolved. Economists say the so-called fiscal cliff could cost the economy $800 billion and three million jobs and would steer the United States back into recession.

President Obama, a Democrat, and Speaker John Boehner, a Republican, have spoken of compromise but appeared to take firm stances on some issues. Mr. Obama will meet with labor representatives as well as other liberal groups on Tuesday. He will hold separate meetings with the business community on Wednesday.

The effect on the markets has been widespread. Fears about the American economy were blamed for keeping a lid on European markets and Asian markets, which closed mostly lower.

In Greece, lawmakers passed a new austerity budget, and the country’s international lenders drafted a report saying it had made progress in righting its finances. Greece is hoping the other euro countries will give it an additional $40 billion in bailout loans. The budget and the report are crucial steps toward that goal.

Still, the new bailout is no sure thing: some of the potential lenders must seek approval from their parliaments. Greece’s main stock market index closed down 3.6 percent.

Mr. Freeze of Street One Financial was among the underwhelmed. “At this point, all the Greek news is just noise,” he said. “None of these bailouts really solve the underlying problem. Now, if all of a sudden Spain became incredibly solvent and its unemployment rate went to 5 percent, then you’d see” a reason to buy.

Leucadia National announced it would buy the investment banking firm Jefferies Group. Jefferies’s chief will run the combined company. Stock in Leucadia, a holding company with investments in eclectic industries including beef processing and medical products, dropped 66 cents, or 3 percent, to $21.14. Jefferies shares soared $2, or 14 percent, to $16.27.

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Looking Ahead: Economic Reports for the Week of Aug. 29

Opinion »

Room for Debate: Are Research Papers Passe?

The Internet has changed how students work. Should curriculums evolve, too?

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Employers Added 179,000 Jobs in April, ADP Says

Private employers in the United States added 179,000 jobs in April, while the pace of growth in the services sector unexpectedly eased in April to its lowest level since August 2010, according to economic reports released on Wednesday.

In the jobs report, the ADP Employer Services report fell short of economists’ expectations for a gain of 198,000, according to a Reuters survey. March private payrolls were revised up to an increase of 207,000 from a previously reported 201,000.

The figures come ahead of the government’s much more comprehensive labor market report on Friday, which includes both public and private sector employment.

“Certainly people will look into this and be pessimistic or cautious about Friday’s numbers,” said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, N.Y.

“The breakdown from the release did show some strength in small and medium businesses. The weakness was actually in large businesses, and that is unusual. But certainly optimistic for a broader strengthening in employment.”

Friday’s report is expected to show a rise in overall nonfarm payrolls of 186,000 in April, based on a Reuters poll of analysts, and a gain of 200,000 in private payrolls.

Economists often refer to the ADP report to fine-tune their expectations for the payrolls numbers, though it is not always accurate in predicting the outcome. The report is jointly developed with Macroeconomic Advisers.

In other report, the Institute for Supply Management said its services index fell to 52.8 last month, from 57.3 in March. That was well below economists’ forecasts for 57.4, according to a Reuters survey.

A reading above 50 indicates expansion in the sector.

The report’s new-orders index tumbled to its lowest level since December 2009, falling to 52.7, from 64.1. The employment gauge dipped to 51.9, from 53.7.

“It’s a weak indication not only in the headline figure, but also in the worst possible place: the orders component,” said Pierre Ellis, senior economist at Decision Economics. “This is a sector that is supposed to be relatively smooth in terms of growth so if it turns out to be more than transitory, this would be a clear indication of destabilization in the economy.”

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Shares Rise on Earnings, but Some Leading Companies Falter

The Dow Jones industrial average closed at a high for the year. The 30-company index rose 52.45 points, or 0.42 percent, to 12,505.99.

“There are a lot of concerns out there, but investors are looking at the bottom line right now, and that’s earnings,” said Yu-Dee Chang, the chief trader at ACE Investment Strategists, a money management firm based in Virginia.

The Standard Poor’s 500-stock index gained 7.02, or 0.53 percent, to 1,337.38. The S. P. 500, a benchmark for most mutual funds, is now less than six points from its highest close of 2011.

The gains were broad. All 10 company groups that make up the S. P. index rose, led by a nearly 1 percent gain in technology companies.

The Nasdaq composite index rose 17.65 points, or 0.63 percent, to 2,820.16.

Apple rose nearly 3 percent after reporting sales and income late Wednesday that came in ahead of analysts’ estimates. The company sold 18.65 million iPhones in the latest quarter, millions more than expected. Verizon Wireless started selling the phones in February, ending three and a half years of exclusivity by ATT.

The Travelers Companies rose nearly 4 percent, leading the 30 companies in the Dow average, after reporting stronger earnings and a 14 percent dividend increase. The company, a commercial insurer, benefited from a decline in losses from catastrophe claims and an increase in corporate insurance sales.

UnitedHealth, a health insurer, rose 8 percent after reporting a 13 percent increase in profit as more employees signed up for coverage.

The stronger earnings results were tempered by weaker-than-expected economic reports. The Labor Department said that the number of people who applied for unemployment benefits fell last week to 403,000. Economists had expected a larger drop. A separate report from the Federal Reserve Bank of Philadelphia found that manufacturing activity in the Philadelphia area fell in April.

Other companies in the Dow fell after investors found worrying signs in their earnings reports.

McDonald’s fell nearly 2 percent, despite beating analysts’ earnings estimates, after the company said it expected the cost of most of its ingredients to rise as much as 5 percent throughout the year.

General Electric fell 2 percent, also despite beating estimates. The company said revenue at its industrial businesses was not growing as quickly as the company’s rivals’.

Interest rates were steady. The Treasury’s benchmark 10-year note rose 2/32, to 101 28/32, and the yield slipped to 3.40 percent from 3.41 percent late Wednesday.

In currency trading, the dollar fell to a 16-month low against the euro with investors expecting the Federal Reserve to keep interest rates near zero, even as many companies were posting better-than-expected quarterly results.

The Fed next meets to talk about interest rates and other monetary policy on Tuesday and Wednesday. The central bank is not expected to cut short the $600 billion bond-purchasing program, set to expire in June, that was intended to drive down interest rates.

The euro was worth $1.4544 late Thursday, up from $1.4514 late Wednesday. The euro earlier rose as high as $1.4648, its strongest level since December 2009.

The British pound rose to $1.6517 from $1.6407, while the dollar fell to 81.90 Japanese yen from 82.37 yen.

The weak dollar drove most commodity prices higher. The Commodity Research Bureau’s index of commodity prices rose 1.90 points, or 0.52 percent, to 367.44.

Gold and silver continued to rise as concerns persisted about global economic issues. The two precious metals attract investors during uncertain economic times because of their reputation as relatively stable assets.

Wheat rose 1.9 percent on worries that dry weather has damaged the winter crop from Kansas to Texas, and rains may delay spring planting in some areas.

Oil prices also rose. Crude oil on the New York Mercantile Exchange rose 84 cents, to $112.29 a barrel.

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