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Hiring, spending propel Wall Street

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By The Associated Press
Thursday, June 13, 2013, 6:57 p.m.
 

NEW YORK — Good news about hiring and spending at retail businesses helped send the stock market sharply higher on Thursday.

For investors, the pair of government reports offered more encouragement that the nation's economic recovery will continue, even as Europe and Japan struggle. The Standard & Poor's 500 index soared 23.84 points, or 1.5 percent, to 1,636.36.

The gains were broad. All 10 industry groups within the S&P 500 rose, led by retailers and other consumer-discretionary companies. Gannet soared 34 percent, the most in the S&P 500, on news that it would buy another media company, Belo.

“The underlying fundamentals of our economy are clearly doing much better,” said Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Mass.

Markets have been turbulent over the past three weeks. The S&P 500 climbed 17 percent from the start of the year to May 21 when it hit an all-time high of 1,669. The index began sliding the next day when the Federal Reserve said it would consider pulling back its support for the economy this year.

It's been a bumpy ride since. The index has fallen as low as 1,608, a trading range of 3.6 percent.

Investors have been debating when the Fed will begin cutting back its bond purchases and worrying about the effect. They could get a better sense next Wednesday, when the bank releases its policy statement and Fed Chairman Ben Bernanke holds another press conference.

“A lot of investors are worried about the Fed,” said Bob Baur, chief global economist at Principal Global Investors in Des Moines, Iowa. “That's going to create a bumpy market at least until they get some clarity on that. But we really think the U.S. is in pretty good shape.”

Baur thinks the economic recovery will pick up speed later this year, which could help push corporate earnings and the stock market higher.

The latest positive news broke early Thursday when the government said the number of Americans seeking unemployment benefits fell 12,000 to 334,000, below what economists had expected. Jim O'Sullivan, chief U.S. economist at High Frequency Economics, wrote in a note to clients that the government's weekly numbers, while volatile, “continue to signal an improving labor market.”

The government also reported that national retail sales increased 0.6 percent in May from April. That was up from a 0.1 percent gain in April and the fastest pace since February.

The Dow Jones industrialHiring average rose 180.85 points, or 1.2 percent, to 15,176.08. The Nasdaq composite rose 44.93 points, or 1.2 percent, to 3,445.36.

In Japan, the benchmark Nikkei 225 index slumped 6.4 percent as doubts grew that Prime Minister Shinzo Abe's economic turnaround plan will succeed. The Japanese market is down 20 percent from a high reached May 22, the definition of a bear market.

That decline followed an extraordinary surge from mid-November to late May. The Nikkei soared 80 percent as investors hoped Japan would finally emerge from its two-decade economic slump.

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