Stocks gain for a second week in a row; GE soars on deal

GE shares soar on news it is selling its lending business

U.S. stocks advanced Friday, capping off a second straight weekly advance for the market. Investors were encouraged by the latest corporate deal news, that General Electric would be selling its long-struggling lending business.

Investors are turning their focus to next week, when corporate earnings ramp up. So far the outlook isn't encouraging. With economic sluggishness in the U.S. and Europe, as wells the rapid appreciation of the dollar, analysts expect first-quarter results to be down 4.6 percent.

“Earnings are not going to be down because the U.S. economy is struggling,” said James Liu, global market strategist at JPMorgan Funds. “It's going to be because of what has happened in energy and the dollar.”

Next week the nation's biggest banks will report their results, including Bank of America, JPMorgan Chase, Wells Fargo and Goldman Sachs. Thirty-five of the members of the Standard & Poor's 500 will report their results, as well as seven members of the Dow Jones industrial average

On Friday the Dow rose 98.92 points, or 0.6 percent, to 18,057.65. The S&P 500 rose 10.88 points, or 0.5 percent, to 2,102.06 and the Nasdaq composite rose 21.41 points, or 0.4 percent, to 4,995.98.

General Electric soared after the company said it would sell most of its lending arm, known as GE Capital, and shift its focus back to its industrial business.

GE's stock jumped $2.78, or 11 percent, to $28.51, making it the biggest gainer in the Dow and the S&P 500.

GE is known for making jet engines, light bulbs and other electronics, but a significant part of the company's business has been financing. GE Capital was a huge business until the financial crisis, when new regulations made being non-bank company in the lending business more difficult. GE spun off its credit card operation into a new company last year called Synchrony Financial.

It was a solid week for the market overall. The Dow and S&P 500 each rose 1.7 percent, while the Nasdaq rose 2.2 percent. The U.S. stock market has not had two straight weeks of gains since mid-February.

Most of this week's gains can be attributed to the Federal Reserve. After the disappointing March jobs report released April 3, traders now believe that the nation's central bank is not going to raise interest rates until September instead of the originally anticipated June timeframe.

William Dudley, president of the Federal Reserve's New York branch, said Monday that the Fed's rate increases would be “shallow” when he cited the recent weak economic data including the jobs report.

“I think we are still looking at two rate hikes this year, but they will likely be later this year,” JPMorgan's Liu said.

Bond prices rose. The yield on the 10-year Treasury note fell to 1.95 percent. The dollar edged down to 120.20 yen from 120.57 yen while the euro fell to $1.0597 from $1.0662.

In energy markets, the price of oil rose Friday after a closely-watched count of working drill rigs declined more sharply than expected, suggesting supplies will soon fall.

Benchmark U.S. crude rose 85 cents to close at $51.64 a barrel in New York. Brent crude, a benchmark for international oils used by many U.S. refineries, rose $1.30 to close at $57.87 in London.

In other futures trading on the NYMEX:

— Wholesale gasoline rose 4.8 cents to close at $1.807 a gallon.

— Heating oil rose 3.9 cents to close at $1.766 a gallon.

— Natural gas fell 1.7 cents to close at $2.511 per 1,000 cubic feet.

In metals trading, gold rose $11 to $1,204.60 an ounce, silver rose 21 cents to $16.38 an ounce and copper edged up half a penny to $2.73 an ounce.

 

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