Stocks charge higher on hopeful economic reports
By The Associated Press
Published: Saturday, May 18, 2013, 12:01 a.m.
NEW YORK — Encouraging news about the economy extended the stock market's rally on Friday.
Small company stocks rose the most, a sign that investors are taking on more risk. Two companies soared in their stock market debuts in the latest indication that the market for initial public offerings is reviving.
Stocks closed higher for a fourth straight week. Indexes are at record levels, surging on optimism about the economy and record corporate earnings. The market also is being supported by ongoing stimulus from the Federal Reserve, which is keeping long-term borrowing costs at historically low levels.
“This slow but relatively steady growth, that keeps inflation in check and keeps interest rates low, is actually a pretty healthy environment for the stock market,” said Liz Ann Sonders, chief investment strategist at Charles Schwab & Co. “Right now, we are very optimistic.”
General Motors rose $1.03, or 3.2 percent, to $33.42. The automaker's stock is trading above the $33 price of its November 2010 initial public offering for the first time in two years.
Northrop Grumman gained $3.17, or 3.2 percent, to $82.19. The defense contractor said its board approved the repurchase of an additional $4 billion in stock and it plans to buy back a quarter of its outstanding shares by the end of 2015.
The Dow Jones industrial average rose 121.18 points, or 0.8 percent, to 15,354.40. The index gained 1.6 percent for the week and is up 17.2 percent for the year.
The index started higher, then drifted through the rest of the morning. The index added to its gains in the afternoon, climbing about 70 points in the last two hours of the day.
The Standard & Poor's 500 index rose 15.65 points, or 1 percent, to 1,666.12. The gauge is up 2 percent this week and has gained 16.8 percent this year.
The strength of the rally in stocks has taken many by surprise, leaving investors waiting for a drop in prices to get into the market, said Jim Anderson, an investment specialist at JPMorgan. The S&P 500 index hasn't fallen for two consecutive days in a month.
“Everyone is waiting for a pullback,” Anderson said. “Every client asks me, ‘When are we getting a pullback?' With so many people waiting for it, and pouncing on it when it arrives, it's over so quickly.”
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