The Free Press, Mankato, MN

Archive

July 2, 2013

Market discounts Fed, pushes stocks higher

NEW YORK — Investors have stopped worrying about the Federal Reserve. At least for now.

Stocks rose on Wall Street Monday as investors judged that the economy still isn’t growing fast enough for the central bank to cut back on its stimulus program.

U.S. manufacturing grew modestly in June after a pickup in new orders and stronger production, according to a private survey. The Institute for Supply Management said its factory index increased to 50.9 in June from 49 in the previous month.

The Standard & Poor’s 500 index logged its first monthly decline since October last month after investors were unsettled by comments from Federal Reserve Chairman Ben Bernanke. Bernanke said last month that the Fed could ease back on its stimulus later this year and end it next year, providing the economy continues to recover.

“The market has ... stepped back from the knee-jerk reaction that the Fed news provided,” said Jim Russell, a regional investment director at US Bank. “The manufacturing ISM number came in strong enough — not too hot, not too cold.”

If the manufacturing report had been stronger, Russell said, stocks might have fallen as investors speculated that the Fed would be inclined to ease back on its stimulus sooner.

A separate report on construction spending added to the picture of a gradually improving economy. Construction spending rose 0.5 percent in May compared with April, when spending was up 0.1 percent.

The Dow Jones industrial average gained 65.36 points, or 0.4 percent, to 14,974. The Dow gained as much as 173 points in during morning trading before drifting lower throughout the afternoon.

The S&P 500 index rose 8.68 points, or 0.54 percent, to 1,614. The Nasdaq composite rose 31.24 points, or 0.9 percent, to 3,434.

The Fed is currently buying $85 billion of bonds a month to keep interest rates low and encourage borrowing and spending. That stimulus has been a major factor supporting a rally in stocks this year and the threat of it being withdrawn made stock markets more volatile last month.

Text Only | Photo Reprints
Featured Ads
Seasonal Content
Free Press news updates
Special Promotions
AP Video
Renewed Violence Taking Toll on Gaza Residents 2 Americans Detained in North Korea Seek Help US Employers Add 209K Jobs, Rate 6.2 Pct House GOP Optimistic About New Border Bill Gaza Truce Unravels; Israel, Hamas Trade Blame Raw: Tunisia Closes Borders With Libya Four Rescued From Crashed Plane Couple Channel Grief Into Soldiers' Retreat WWI Aviation Still Alive at Aerodrome in NY Raw: Rescuers at Taiwan Explosion Scene Raw: Woman Who Faced Death Over Faith in N.H. Clinton Before 9-11: Could Have Killed Bin Laden Netanyahu Vows to Destroy Hamas Tunnels Obama Slams Republicans Over Lawsuit House Leaders Trade Blame for Inaction
Poll