US Stocks Extend Gains to 5th Day 05/24 15:57
U.S. stocks rose for the fifth consecutive day Wednesday as investors went
on a late buying spree. The gains came after news that the Federal Reserve
plans to start reducing its huge portfolio of bonds. The Standard & Poor's 500
index closed at a record high.
NEW YORK (AP) -- U.S. stocks rose for the fifth consecutive day Wednesday as
investors went on a late buying spree. The gains came after news that the
Federal Reserve plans to start reducing its huge portfolio of bonds. The
Standard & Poor's 500 index closed at a record high.
Stocks were slightly higher for most of the day as the market kept chipping
away at the losses it suffered one week before. Technology companies like
TurboTax maker Intuit and materials companies including industrial gas company
Praxair made some of the biggest gains.
In the afternoon the Federal Reserve released the minutes from its latest
meeting. Officials discussed steps for shrinking the central bank's $4.5
trillion in bond holdings and Wall Street liked what it saw.
The Fed bought huge amounts of bonds during the global economic crisis in an
effort to stimulate the economy. When the Fed suggested in April that it was
considering reducing its portfolio, investors were unnerved. But when investors
saw some details of how the plan might look, they were pleased.
"They're going to do it in a very careful, slow, and, at least by Fed
standards, transparent method," said Ed Campbell, senior portfolio manager at
QMA, a fund owned by Prudential Financial. "They're not going to do it in a way
that runs the risk of shocking the market."
The Standard & Poor's 500 index picked up 5.97 points, or 0.2 percent, to
2,404.39. The Dow Jones industrial average gained 74.51 points, or 0.4 percent,
to 21,012.42. The Nasdaq composite rose 24.31 points, or 0.4 percent, to
6,163.02. The Russell 2000 index of small-company stocks added 1.53 points, or
0.1 percent, to 1,382.51.
In the wake of the Fed's disclosure, bond prices turned higher. The yield on
the 10-year Treasury note fell to 2.25 percent from 2.28 percent. High-dividend
stocks including utility companies and real estate investment trusts climbed as
investors looked for yield. NRG Energy jumped 88 cents, or 5.5 percent, to
$16.76 and Simon Property Group gained $2.53, or 1.6 percent, to $159.78.
Industrial gas company Praxair rose after it agreed to terms with Germany's
Linde. The companies said they would combine in an all-stock deal in December,
part of a wave of consolidation in the chemical and materials industries.
Praxair picked up $2.30, or 1.8 percent, to $132.27. Linde's German stock rose
Dow Chemical and DuPont, which are also planning to combine, rose as well.
Dow picked up 67 cents, or 1.1 percent, to $61.45 and DuPont advanced $1.04, or
1.3 percent, to $78.38.
Accounting software maker Intuit had a stronger quarter than investors
expected and Wall Street was also pleased with its forecasts. Its stock gained
$8.68, or 6.7 percent, to $137.83. Other technology firms once again rallied.
Hard drive maker Western Digital added $1.67, or 1.9 percent, to $89.70 and
chipmaker Nvidia rose $1.54, or 1.1 percent, to $138.57.
General Electric slumped after CEO Jeffrey Immelt addressed an industry
conference. Immelt suggested it will be tough for the company to reach the
earnings targets some investors want to see. The stock fell 45 cents, or 1.6
percent, to $27.83. GE, which is seen as a bellwether for many different
industries, has been trading at its lowest price in a year and a half.
Home improvement retailer Lowe's stumbled after investors were unimpressed
by its profit and sales, as a hefty charge cut into its earnings in the first
quarter. Lowe's shares fell $2.49, or 3 percent, to $79.85. Lowe's stock is
flat over the last year while rival Home Depot has jumped 16 percent.
Sales for jewelry retailer Tiffany weren't as good as expected in the first
quarter. The company changed CEOs in February as it struggled with competition
from online retailers and had difficulty attracting younger customers. Its
stock dropped $8.11, or 8.7 percent, to $85.03 and Signet Jewelry fell $3.85,
or 6.6 percent, to $54.53.
Benchmark U.S. crude lost 11 cents to settle at $51.36 per barrel in New
York while Brent crude, used to price international oils, sank 19 cents to
$53.96 a barrel in London. Oil prices have rallied lately as members of the
OPEC cartel and other countries prepare to meet and discuss production. Those
nations are expected to extend last year's production cut in a concerted
attempt to prevent oil prices from falling.
Wholesale gasoline gave up 1 cent to $1.65 a gallon. Heating oil remained at
$1.61 a gallon. Natural gas lost 1 cent to $3.21 per 1,000 cubic feet.
Gold fell $2.40 to $1,253.10 an ounce. Silver lost 2 cents to $17.12 an
ounce. Copper fell 1 cent to $2.58 a pound.
The dollar rose to 111.90 yen from 111.76 yen. The euro edged up to $1.1195
The FTSE 100 index in Britain was up 0.3 percent and Germany's DAX fell 0.2
percent. The CAC 40 in France was 0.2 percent lower. The Hang Seng in Hong Kong
finished unchanged after Moody's downgraded the Chinese government's credit
rating. The firm said it expects China's financial strength to erode as debt
rises, but its rating for the country is still relatively high. Tokyo's Nikkei
225 rose 0.7 percent. The Kospi in South Korea gained 0.2 percent.