Dow Bounces Back to Gain 73
Mild economic data gave Wall Street a moderate gain Thursday as stocks survived a round of profit taking ahead of the Labor Department’s June employment report today.
The market got an initial boost from economic and retail sales data that fed optimism about an end to the Federal Reserve’s interest rate hikes. But traders already were looking ahead to the employment report -- widely seen as a key indicator of the economy’s health -- prompting some to hedge their bets and lock in profits.
With the Fed recently signaling that it could be done raising rates, upcoming economic data and corporate earnings will be critical for stocks. In today’s jobs report, numbers too far above or below expectations could reignite worries about inflation and economic growth, said Ken Tower, chief market strategist for Schwab’s CyberTrader.
“It’s really a fine line,” Tower said. “Too much good news fires up this inflation fear and suggests the Fed will have to keep raising rates. Too much of a slowdown threatens profits.”
The Dow gained 73.48 points, or 0.66%, to 11,225.30, after rising almost 105 points earlier. The Dow slumped 76 points Wednesday amid concerns about North Korea’s missile launch and soaring oil prices.
Broader stock indicators ended slightly higher. The Standard & Poor’s 500 index added 3.17 points, or 0.25%, to 1,274.08, and the Nasdaq composite index rose 1.75 points, or 0.08%, to 2,155.09.
Advancing issues led decliners by 5 to 3 on the New York Stock Exchange.
Yields on U.S. Treasuries fell after a private survey showed the pace of service industry expansion in June slowed more than economists forecast, damping expectations the Fed will lift interest rates next month.
The Institute for Supply Management said its services index fell 3.1 points to 57, below economists’ forecast of 59.
The yield on the benchmark 10-year T-note dropped to 5.18%, from 5.22% on Wednesday.
Oil futures steadied after nervousness about tensions with North Korea propelled prices to a new high Wednesday. A barrel of light crude lost 5 cents to $75.14 in New York trading.
First-time applications for jobless benefits slipped by 2,000 to 313,000 last week, the Labor Department said. Fewer average claims in June suggested a possible rebound in job growth.
In other market highlights:
* Cigarette makers rallied after the Florida Supreme Court dropped a $145-billion verdict against tobacco companies, saying the award was excessive. Altria surged $4.43 to $77.76 and Reynolds American jumped $4.59 to $118.95.
* Retailers reported slower sales as gasoline prices curbed spending and flooding discouraged East Coast shoppers. The International Council of Shopping Centers said sales increased 2.6% last month, less than the 3.8% average this year.
Wal-Mart Stores fell 30 cents to $46.72 after it said June sales at stores open at least a year rose 1.2%, the smallest gain in 14 months. But Target advanced 90 cents to $49.17 after it reported a 4.8% sales increase.
* Advo jumped $11.13 to $35.39 after Valassis Communications, the biggest provider of newspaper inserts, offered to buy the direct marketing company for about $1.12 billion. Valassis dropped $3.65 to $19.57.
* In overseas markets, North Korea worries sent Japan’s Nikkei stock average falling 1.3%.
European shares jumped, shrugging off hawkish European Central Bank comments. The German market rallied 1.2% and French shares gained 0.9%.
The European Central Bank kept its key rate at 2.75% but signaled it was poised to quicken the pace of rate increases by tightening again in early August.
In Mexico, stocks soared after conservative candidate Felipe Calderon appeared to win the presidency in the official vote count. The IPC index jumped 2.7%.
