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Investors set aside global tensions, drive market

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By The Associated Press
Tuesday, Aug. 12, 2014, 12:01 a.m.
 

NEW YORK — Stocks gained on Monday as investors focused on corporate news instead of geopolitical worries.

The stock market was extending a rebound from Friday, when it logged its biggest one-day gain in five months on signs that tensions in Ukraine might be easing. In July, stocks had slumped as tensions between Russia and the West escalated.

“We're hopeful that geopolitical tensions will ramp down,” said Jim Russell, a regional investment director at US Bank. “The fundamental economic backdrop remains pretty firm, even though investment sentiment remains less than certain.”

The Standard & Poor's 500 index rose 5.33 points, or 0.3 percent, to 1,936.92. The Dow Jones industrial average climbed 16.05 points, or 0.1 percent, to 16,569.98 percent. The Nasdaq composite gained 30.43 points, or 0.7 percent, to 4,401.33.

Energy company Kinder Morgan was the biggest gainer in the S&P 500, rising $3.25, or 9 percent, to $39.37. The company said on Sunday that the group of oil and gas pipeline and storage companies that it controls will combine.

Investors were tracking corporate earnings reports.

Shares of Priceline Group rose $27.72, or 2.2 percent, to $1,309.20 when the company reported second-quarter earnings that topped Wall Street expectations. The online travel company said the summer season got off to a strong start. Shares of rival Expedia gained $1.39, or 1.7 percent, to $83.94.

More than 90 percent of the companies in the S&P 500 index have reported earnings for the second quarter.

Company earnings are expected to grow by 10.1 percent in the period, according to data from S&P Capital IQ. That compares with growth of 4.9 percent in the second quarter last year and growth of 3.4 percent in the first quarter.

Even though stocks have rallied during the past two sessions, investors should get used to the prospect of increased volatility in the market as the Federal Reserve nears the end of its economic stimulus program and gets closer to raising interest rates, said Kristina Hooper, United States investment strategist at Allianz Global Investors.

“Stocks are a lot more vulnerable with markets pricing in a less accommodative Fed,” Hooper said.

Government bond prices were little changed. The yield on the 10-year Treasury note held at 2.42 percent from Friday, close to its lowest level in a year.

Longer-dated Treasury notes and bonds have surged this year even though the Federal Reserve is winding down its economic stimulus and purchasing fewer bonds. Analysts say that demand for the notes has increased because the yields on the bonds of other developed nations have fallen further. The yield on the 10-year German government bond is 1.06 percent and the yield on France's government bonds with a similar maturity is 1.47 percent.

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