Correction: Wall Street story
- Associated Press
- March 21, 2014 - 12:20 PM
NEW YORK — In a story March 20 about the stock market, The Associated Press misidentified Charles Schwab's Omar Aguilar as the chief investment officer. He is Schwab's chief investment officer for equities.
A corrected version of the story is below:
Better news on the US economy drives stocks higher
Signs of a spring thaw in economy drive US stocks higher; Microsoft gains on tablet hopes
By STEVE ROTHWELL
AP Markets Writer
NEW YORK (AP) — The stock market got a bounce on the first day of spring.
Signs that the U.S. economy is emerging from a winter chill drove major stock indexes higher Thursday. Investors were encouraged by an increase in manufacturing and a rise in a key index of economic indicators.
The market had slumped the day before, when Federal Reserve Chair Janet Yellen suggested that the central bank could start raising interest rates sooner than many investors had expected.
"The economy is likely to have a good bounce in the springtime," said Peter Cardillo, chief market economist at Rockwell Global Capital. "The market is reacting to the good economic news."
The Standard & Poor's 500 index rose 11.24 points, or 0.6 percent, to 1,872.01. The Dow Jones industrial average gained 108.88 points, or 0.7 percent, to 16,331.05. The Nasdaq composite climbed 11.68 points, or 0.3 percent, to 4,319.29.
The S&P 500 came within a fraction of a point of wiping out all of its losses from a day earlier, when it dropped 11.48 points.
Stocks started the day lower, extending their losses from Wednesday, as investors mulled comments the day before from Yellen, who set the stage for a possible interest rate hike by the middle of next year. The Fed on Wednesday also dropped its previous position of saying it would consider raising interest rates once the unemployment rate declined to 6.5 percent. Unemployment is currently 6.7 percent.
Higher interest rates could slow the economy by raising the cost of borrowing money. That could hold companies back from borrowing to expand their businesses or discourage consumers from taking out loans such as mortgages. At the same time, a decision by the Fed to raise rates would indicate the central bank thinks the economy is getting stronger.
The market turned higher in midmorning trading following news that a measure of the U.S. economy's health rose in February by the largest amount in three months. That suggests growth will accelerate following a severe winter.
The Conference Board's index of leading indicators increased 0.5 percent following a slight 0.1 percent rise in January and a 0.1 percent decline in December.
The Federal Reserve Bank of Philadelphia said separately that manufacturing rebounded in that region in March as new orders increased.
Microsoft was among the big gainers on Thursday. The software company's stock climbed $1.06, or 2.7 percent, to $40.33 after analysts at Morgan Stanley said a rumored plan to make a version of its Office software available for iPad devices could generate $1.2 billion in annual revenue.
3-D printing companies were among the losers after ExOne reported a fourth quarter loss late Wednesday and said its revenue fell. ExOne slid $4.35, or 10 percent, to $39.40. Other 3D-printer companies, including Stratasys and 3D Systems, also fell.
Stocks have become more volatile this year as Fed policy makers have started reducing their economic stimulus, and investors have fretted whether the economy is strong enough to maintain its recovery without the central bank's support.
The stock market is in the sixth year of a bull market and has risen 172 percent since March 2009. That rise has been aided by the Fed's stimulus, which has strengthened the economy by keeping interest rates low.
As the Fed cuts back on stimulus, investors are splitting into roughly two camps, said Omar Aguilar, chief investment officer for equities at Charles Schwab.
"You have those that believe that the only reason the market has gone up for the last five years is because of the stimulus program ... that is clearly coming to an end," said Aguilar. "Other investors think that the economy is in good shape."
Bond prices were little changed a day after the Fed announced it would make further reductions to its bond-buying program. The yield on the 10-year government was unchanged from Wednesday at 2.77 percent.
The price of crude oil fell 94 cents, or 0.9 percent, to $99.43 a barrel. Gold dropped $10.80, or 0.8 percent, to $1,330.50 an ounce
Among other stocks making big moves:
— ConAgra Foods rose 40 cents, or 1.4 percent, to $29.99 after the company said its latest quarterly earnings nearly doubled. It continues to benefit from the acquisition of private-label food maker Ralcorp.
— Guess slumped 98 cents, or 3.4 percent, to $27.78 after the apparel maker reported lower quarterly income and predicted a loss for the current period.
— Q2, a provider of online banking platforms to community banks, surged on its first day of trading on the New York Stock Exchange. The stock rose $2.17, or 16.7 percent, to $15.17.
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