Stocks gain to finish a quieter week
Wall Street ended its calmest week in a month with a big advance in stock prices Friday, rising on solid economic readings that countered the bleak sentiment that has blanketed the financial markets. The Dow Jones industrial average rose more than 140 points.
Stocks started out flat but jumped after a stronger-than-expected reading on July sales of new homes. Those figures came after the government said that orders for big-ticket goods rose sharply last month.
The Dow rose 142.99 points, or 1.1%, to 13,378.87.
The Standard & Poor’s 500 index gained 16.87 points, or 1.2%, to 1,479.37. The Nasdaq composite climbed 34.99 points, or 1.5%, to 2,576.69.
The Russell 2,000 index of smaller companies rose 10.68 points, or 1.4%, to 798.93.
Advancers outnumbered decliners by more than 3 to 1 on the New York Stock Exchange.
After weeks of volatility in which triple-digit drops in the Dow became the norm, stocks moved more modestly this week as investors tried to gain perspective on the troubles in the sub-prime mortgage market and the credit markets as a whole.
Moves by the world’s major central banks, including the Federal Reserve, to pump money into the banking system in an effort to keep credit flowing helped bolster market sentiment. A bit of merger news also helped embolden investors.
For the week, the Dow rose 2.3% and recorded its biggest point gain since the week ended April 20.
The blue chips now sit about 622 points, or 4.7%, below their July 19 record close.
The S&P; 500 and the Nasdaq saw their biggest weekly point gains since the week ended March 23. The S&P; rose 2.3%, and the Nasdaq added 2.9%. The Russell 2,000 gained 1.6%.
In the bond market, investors grew more comfortable Friday buying some of the short-term corporate IOUs, such as commercial paper, that they had shunned earlier in the week amid a continuing aversion to risk taking.
Bolstering that trend, the Fed on Friday affirmed its policy of accepting “investment quality” asset-backed commercial paper as collateral for loans to banks.
Overnight yields on top-rated asset-backed commercial paper eased to 6.04% on Friday from 6.09%, a nearly seven-year high. By contrast, the yield on three-month T-bills surged to 4.22% from 3.9% late Thursday as demand for super-safe securities waned.
Among longer-term bonds, the benchmark 10-year Treasury note’s yield slipped Friday to 4.62% from 4.64% late Thursday.
The dollar was mixed against other major currencies. Gold prices rose.
Oil futures surged $1.26 to $71.09 a barrel in New York, boosting energy stocks. Exxon Mobil rose $1.94, or 2.3%, to $85.69.
Crude prices had fallen earlier in the week after it appeared there was no major damage to oil rigs from Hurricane Dean’s passage through Mexico.
In economic news, the Commerce Department said new-home sales rose 2.8% in July on a seasonally adjusted basis after falling 4% in June. A second report showed that orders for durable goods -- those expected to last at least three years -- jumped 5.9% in July, the biggest gain in 10 months.
The housing report appeared to ease concerns that the U.S. economy might tip into recession because of a skidding housing market and tightening access to credit.
However, the upbeat reports may have disappointed investors who had been hoping weak readings would goad the Fed into cutting the federal funds rate, which is the rate banks charge each other for overnight loans and the benchmark short-term rate for U.S. credit markets.
The recent tumult in the stock and credit markets had boosted expectations among some investors that the central bank would have to intervene with a cut in the federal funds rate at or even before its Sept. 18 meeting.
In other market highlights:
Gap jumped $1.11, or 6.4%, to $18.51 after posting a 19% rise in earnings and announcing plans for a $1.5 billion share repurchase.
Whole Foods Market climbed $1.20 at $44.54 after a federal appeals court cleared the way for the company to buy rival grocer Wild Oats Markets. Wild Oats rose 39 cents to $18.46. The government had sought to delay the sale, which it has challenged on antitrust grounds.
AnnTaylor Stores surged $2.79 to $32.43. The women’s apparel retailer predicted a strong second half of the year and affirmed its earnings forecast.
Marvell Technology Group fell $2.10, or 11.8%, to $15.75 after the integrated circuit maker swung to a second-quarter loss amid steep charges.
Overseas, key stock indexes fell 0.4% in Japan, 0.2% in Hong Kong and 0.1% in Germany. Shares rose 0.4% in Britain and 0.8% in France.
