Stocks climb, lifted by rising bond yields and company earnings

Stocks finished broadly higher on Wall Street on Thursday as bond yields rose, easing concerns about a troubling drop in long-term yields over the last week.

Gains by financial, technology and industrial stocks outweighed losses by utilities and communications companies. Smaller-company stocks performed better than the broader market.

A sharp rebound from a dismal end to 2018 has the benchmark Standard & Poor’s 500 index on track for its biggest quarterly gain since the third quarter of 2009.

Thursday’s rally, which followed a stumble earlier in the day, came as bond yields rose off their recent lows. The yield on the benchmark 10-year Treasury note edged up to 2.39% from 2.37% on Wednesday.

“The markets are looking closely at bond yields, and the fact that bond yields have eased a little bit is a reason for the stock market to breathe a little easier today,” said Erik Davidson, chief investment officer at Wells Fargo Private Bank.

The S&P 500 rose 10.07 points, or 0.4%, to 2,815.44. The Dow Jones industrial average rose 91.87 points, or 0.4%, to 25,717.46. The Nasdaq composite ticked up 25.79 points, 0.3%, to 7,669.17.

The Russell 2000 index of smaller-company stocks climbed 12.87 points, or 0.8%, to 1,535.10.

Despite an uneven week of trading, the S&P 500 is still up 12.3% so far in 2019, a blockbuster start to a year. Still, investors remain anxious about the slowing global economy and worrisome signals coming from the bond market.

Key bond yields fell to their lowest levels in more than a yearMarch 22 and continued to slide this week after the Federal Reserve said it was seeing slower growth in the economy and no longer expected to raise interest rates this year.

Even after edging up Thursday, the 10-year Treasury yield remained below the yield on the three-month Treasury bill. That kind of “inversion” in bond yields is an unusual phenomenon that has preceded recessions in the past.

“When the yield curve inverts, on average, it’s about 18 months before the start of a recession,” Davidson said. “That would still be a long ways off, and the markets can still do pretty well between now and then.”

The rise in bond yields gave bank stocks a boost. Citigroup shares climbed 2.1%. Higher bond yields are good for banks because banks can earn more income from the bonds they hold and can charge higher interest rates on loans.

Encouraging company earnings and outlooks also helped lift stocks Thursday.

Movado leaped 22.8% after the watchmaker reported strong quarterly earnings. PVH, the parent of Calvin Klein and other brands, jumped 14.8% after posting solid quarterly results.

Lululemon Athletica climbed 14.1% after the athletic apparel retailer posted better-than-expected quarterly results and issued a positive outlook.

Consulting firm Accenture rose 5.2%, making it the biggest gainer in the technology sector, after its latest quarterly results topped Wall Street’s forecasts.

Verizon slid 3%, leading the decline in communications services stocks.

Traders brushed off a discouraging U.S. economic snapshot. The Commerce Department said U.S. economic growth slowed sharply in the last three months of 2018 to an annual rate of just 2.2%, reflecting weakness in consumer spending, business investment, government spending and housing.

Economists believe growth has slowed further in the current January-through-March quarter because of weaker growth prospects in China and Europe, the dampening effects on U.S. exports from the Trump administration’s trade battles and the waning boost from the 2017 tax cut and government spending.

The more downbeat outlook for economic growth has prompted the Federal Reserve to signal that it plans to keep its benchmark interest rate on hold this year.

Looking ahead, investors have their eye on several potential market-moving developments.

Chinese and U.S. trade negotiators are preparing for a round of talks aimed at ending a tariff war between the world’s two biggest economies. And the countdown to Britain’s departure from the European Union looms large.

In addition, the next big wave of corporate earnings reports kicks into gear in mid-April.

Benchmark U.S. crude fell 0.2% to $59.30 a barrel. Brent crude, used to price international oils, was little changed at $67.82 a barrel.

In other energy futures trading, wholesale gasoline fell 0.8% to $1.88 a gallon. Heating oil fell 0.4% to $1.97 a gallon. Natural gas fell 0.3% to $2.71 per 1,000 cubic feet.

Gold fell 1.6% to $1,295.30 an ounce. Silver rose 2.1% to $14.97 an ounce. Copper rose 0.3% to $2.87 a pound.

The dollar rose to 110.58 yen from 110.36 yen. The euro weakened to $1.1226 from $1.1263. The British pound fell to $1.3059 from $1.3262.