Stocks gain on reassurance from a top Fed official
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Print | Originally published: May 21, 2013 - 1:53 pm
NEW YORK (AP) - Reassuring comments from a Federal Reserve official and better earnings from two big retailers helped push the stock market higher Tuesday.
Stock indexes wobbled between gains and losses in early trading, then took a turn higher just before noon. That's when news crossed that James Bullard, head of the Fed's St. Louis branch, told an audience in Germany that the Fed ought to stick with its bond-buying effort to bolster the economic recovery.
"Those words were a salve for investors' nerves," said Lawrence Creatura, a fund manager at Federated Investors. Other Fed officials have recently talked about scaling back the program. "There's a lot of uncertainty surrounding this issue. And uncertainty and investors aren't always a happy match."
The Dow Jones industrial average rose 52.30 points to 15,387.58, a gain of 0.3 percent.
The Standard & Poor's 500 index edged up 2.87 points to 1,669.16, a slight increase of 0.2 percent. Both the Dow and the S&P are at record highs.
Many investors were already looking ahead to Wednesday, when the Federal Reserve will release minutes from its most recent policy meeting and Chairman Ben Bernanke will go before Congress to discuss his outlook for the U.S. economy.
"I think a lot of people are sitting on their hands waiting to see what the Fed says tomorrow," said Michael Binger, senior portfolio manager at Gradient Investments in Minneapolis, Minn.
Binger said some investors believe the Fed's support is the main reason the stock market has soared to all-time highs. If the Fed pulls back, they reason, the market's epic rally would come to an end.
In other trading, the Nasdaq composite rose 5.69 points to 3,502.12, a 0.2 percent gain.
J.P. Morgan Chase & Co. gained 1.4 percent. Shareholders of the country's biggest bank voted to allow Jamie Dimon to keep his two titles, CEO and chairman of the board. Groups had pushed to split the two jobs, a drive that gained momentum from a multi-billion trading loss last year. The bank's stock rose 73 cents to $53.02.
Home Depot surged 2.5 percent. The retailer reported an 18 percent increase in quarterly income as the housing market continued to recover. Home Depot rose $1.95 to $78.71.
Among other companies posting quarterly results, AutoZone jumped 5 percent. Better sales and shrinking costs helped the auto-parts company beat analysts' earnings forecasts. AutoZone leapt $18.79 to $427.84.
It has been another solid earnings season for big companies, with corporate profits hitting all-time highs even as revenue barely rises.
Seven of every 10 companies in the S&P 500 have trumped Wall Street's earnings forecasts, according to S&P Capital IQ. First-quarter earnings are on track to climb 5 percent over the year before. Revenue is expected to rise just 1 percent.
In the market for U.S. government bonds, the yield on the 10-year Treasury note slipped to 1.93 percent from 1.96 percent late Monday.
In commodities trading, crude oil sank 55 cents to settle at $96.16 a barrel.
The price of gold fell $6.50 to $1,377.60 an ounce, extending a slump that has knocked gold down 18 percent this year. Tame inflation, a stronger dollar and a surging stock market have undermined gold's appeal.
Among other companies in the news:
_ Carnival Corp slumped 4 percent. The cruise-ship operator cut its earnings forecast for the year late Monday as it wrestles with the fallout from high-profile incidents, which left passengers stranded at sea. Carnival's stock lost $1.51 to $33.81.
_ Best Buy dropped 4 percent after reporting a quarterly loss and sales that fell short of the forecasts of financial analysts who follow the company. Its stock lost $1.17 to $25.64.
_ TiVo gained 2 percent, or 26 cents, to $12.92. The digital video recording company narrowed its quarterly loss with the help of higher sales from more subscribers.
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