Stocks Rise Modestly in Wake of Tepid Data
Stocks advanced for a fourth straight day Thursday after tepid reports on housing starts and claims for unemployment benefits gave investors few clues about the direction of the economy and interest rates.
Investors were hoping for a hint of how the Federal Reserve, which meets at the end of this month, will formulate its monetary policy for the coming months. But Thursday’s economic reports gave the market little guidance.
“Investors are parsing every bit of economic data for an indication that the Fed is willing to step aside” and end its yearlong streak of rate hikes, said Joseph Keating, chief investment officer at AmSouth Asset Management.
The Dow Jones industrial average rose 12.28 points, or 0.1%, to 10,578.65.
Broader stock indicators also closed narrowly higher. The Standard & Poor’s 500 index rose 4.38 points, or 0.4%, to 1,210.96. The Nasdaq composite index closed up 14.23 points, or 0.7%, at 2,089.15.
Advancing issues led decliners 2 to 1 on the New York Stock Exchange.
The Commerce Department reported that housing starts edged up 0.2% in May, slightly less than expected, but the level of new construction permits remained strong, a sign of continuing strength in the sector.
The Labor Department said unemployment-benefit claims were up 1,000 to 333,000 last week, in line with expectations. Recent claim levels have been moderate, but analysts expect auto industry layoffs to send them higher in July.
A report from the Philadelphia Federal Reserve that its regional economy was contracting sent stocks down temporarily. Philadelphia-area manufacturers saw overall activity fall in June, the first negative reading in 25 months, according to the unexpectedly weak report.
The report boosted bond prices, causing yields to drop. The yield on the benchmark 10-year U.S. Treasury note fell to 4.07%, from 4.1% on Wednesday.
Bond traders noted a disconnect between consistent optimism from Fed policymakers and an erratic flow of data that sometimes points to growth but in other instances suggests an economic slowdown is in the making.
In other market highlights:
* Oil prices climbed by $1.01 a barrel, to a 10-week high of $56.58, as concerns about strong demand for gasoline dominated the market’s psychology.
* General Motors slid 72 cents to $35.62, for the steepest drop in the Dow average. The automaker might not get enough union concessions on healthcare costs this year to justify the stock’s 14% gain in the last week, Deutsche Bank analyst Rod Lache wrote in a note to clients.
* Bed Bath & Beyond gained $1.93 to $43.92. The home-furnishings retailer may see 20% annual earnings growth “over the longer term,” helped by expansion of its Christmas Tree Shops, Lehman Bros. Holdings analyst Alan Rifkin wrote in a report.
* New York Times Co. jumped $1.41 to $32.15, for its biggest advance since October 2002. The No. 3 U.S. newspaper publisher said second-quarter profit would fall from a year earlier. The shares rallied because the decline was not as large as some investors anticipated after rivals Knight-Ridder and Tribune reported weaker sales. Knight-Ridder rose 89 cents to $61.92, and Tribune, owner of the Los Angeles Times, rose 80 cents to $36.05.
* Goldman Sachs Group rose $3.46 to $102.65 despite reporting a sharp drop in earnings as investment banking and trading revenue fell. Profit of $1.71 a share missed analysts’ estimates by 10 cents, but the company was upbeat about its performance in the coming quarter.
