Stock close up; GM gains on buyback announcement

GM gains after auto maker announces a $5-billion stock buyback

The stock market's bull run turned six on Monday. The anniversary was marked with modest gains.

Stocks rose as the market steadied after a big sell-off on Friday. The market had slumped after a strong jobs report raised the likelihood of the Federal Reserve raising interest rates sooner than had previously been expected.

On Monday, General Motors was among the biggest gainers after announcing a $5 billion stock buyback plan. Macerich, a real estate investment trust, jumped after bigger rival Simon Property made a hostile bid for the company.

Stocks are becoming more volatile as investors try to assess the potential impact on the U.S. economy if the Federal Reserve starts to raise interest rates later this year. The Fed has kept its benchmark lending rate close to zero for six years, underpinning a run in stocks that stretches back to March, 2009.

“Every time the market settles in on what the Fed will do, it gets spooked a little bit,” said Jim Dunigan, chief investment officer at PNC Asset Management. “Today, that anxiety subsided a bit.”

The Standard & Poor's 500 index rose 8.17 points, or 0.4 percent, to 2,079.43. The Dow Jones industrial average gained 138.94 points, or 0.8 percent, to 17,995.72. The Nasdaq composite climbed 15.07 points, or 0.3 percent, to 4,942.44.

The market was recovering some losses after a big sell-off Friday, when a strong jobs report boosted expectations that the Fed would raise interest rates later this year, possibly as early as June.

General Motors was among the biggest gainers on Monday.

The automaker announced a plan to buy back its own stock. The move is part of a deal with Harry Wilson, an activist investor and a former member of the government task force that restructured GM coming out of its 2009 bankruptcy. In exchange, Wilson agreed to withdraw his hostile candidacy for the Detroit automaker's board of directors. GM's stock rose $1.12, or 3.1 percent, to $37.66.

Macerich, a real estate investment trust that specializes in retail properties, was another winner.

Its stock climbed $6.04, or 7 percent, to $92.76 after Simon Property made a hostile bid of $16 billion in cash and stock for the company.

The S&P 500 has tripled since bottoming out at 676.53 six years ago in the wake of the housing market collapse and the Great Recession. The streak of gains is the fourth longest since the 1940s and has pushed the stock market to record levels.

Despite those sizeable gains, few analysts are calling an end to the bull market just yet.

Scott Wren, a senior global equity strategist at the Wells Fargo Investment Institute, says investors should still take advantage of any sell-offs to add to their positions.

“Overall, you're still going to get out of this year with good, but not great returns,” Wren said. Wren forecasts that overseas growth will pick up, helping to underpin a steady recovery in the U.S.

Gains on Monday were led by industrial and technology stocks. These so-called cyclical stocks are most likely to benefit the most if economic growth picks up.

Investors were also keeping an eye on developments overseas.

In Europe, The European Central Bank started its 60 billion euro ($65 billion) per month bond-buying program on Monday. The bank hopes the purchases will stimulate the eurozone economy and get inflation back to the bank's target of just below 2 percent. At present, consumer prices in the 19-country currency bloc are falling at an annual rate of 0.3 percent.

The divergence between the Fed and the ECB's monetary policies has caused the dollar to appreciate against other currencies. The dollar has surged since December, gaining against both the euro and the Japanese yen.

The dollar traded at $1.0853 against the euro on Monday, close to a 12-year high. It also gained against the yen, climbing to 121.15 yen.

U.S. government bond prices rose. The yield on the 10-year Treasury note fell to 2.19 percent from 2.25 percent on Friday.

Precious and industrial metals futures closed mixed. Gold edged up $2.20 to $1,166.50 an ounce, silver fell three cents to $15.78 an ounce and copper rose six cents to $2.67 a pound.

The price of oil rose slightly on forecasts that a dramatic increase in inventories at the country's main storage hub in Cushing, Oklahoma may be abating. Benchmark U.S. crude rose 39 cents to close at $50 a barrel in New York. Brent crude, a benchmark for international oils used by many U.S. refineries, fell $1.20 to close at $58.53 a barrel in London.

In other futures trading on the NYMEX:

— Wholesale gasoline fell 0.7 cent to close at $1.875 a gallon.

— Heating oil fell 2.9 cents to close at $1.840 a gallon.

— Natural gas fell 16.1 cents to close at $2.678 per 1,000 cubic feet.

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