Star-Bulletin news services
Stocks free from bonds
to increase moderately
NEW YORK >> Upbeat economic news, including a nominal increase in wholesale prices, reassured investors yesterday that business is improving, prompting them to send stocks moderately higher.
The market closed shortly before a huge power outage blacked out a wide swath of the Northeast, affecting cities from New York to Cleveland, Detroit and Toronto. It was not immediately known if the financial markets would be open today.
Stocks recouped some of their losses from Wednesday, when a big selloff in the bond market spilled over to the equity market. As bond prices fall, yields rise, which can make bonds more attractive than stocks.
"The fact that (bond) interest rates are going up on better-than-expected economic data is not a negative for the stock market, but actually a plus. Rates are going up because ... of an expected pickup in economic activity," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc.
Still, the gains were modest, which analysts said was due to investors feeling more cautious with the major indexes near their highs for the summer. Moreover, August is typically a slow month on Wall Street, a time when stocks make little progress as traders and investors take summer vacations.
After falling as much as 52.94 in the early going, the Dow Jones industrial average closed up 38.80, or 0.4 percent, at 9,310.56, according to preliminary calculations shortly before the power failure occurred. Because computers used to calculate the numbers were operated by organizations affected by the outage, it was not immediately known if they were final.
A spokesman for the New York Stock Exchange, Raymond Pellecchia, said it intended to open Friday with backup power generators as needed. "No data from today's trading has been lost," he said.
Both the Nasdaq and the American Stock Exchange said there was minimal impact on their operations because the power failure happened after the close. A Nasdaq spokesman said the exchange was on backup power and, like the NYSE, would use it if necessary to resume trading Friday morning.
The Nasdaq was trading near its summer high of 1,754.82, reached on July 14. And, the S&P was within reach of its summer high of 1,011.66, where it finished on June 17.
Advancing issues outnumbered decliners about 8 to 5 on the New York Stock Exchange. Trading volume was very light.
The Russell 2000 index, which tracks smaller company stocks, rose 3.75, or 0.8 percent, to 471.22. The NYSE composite index gained 40.86 to 5,610.48. The American Stock Exchange composite index slipped 2.89 to 959.55.
In the bond market, the price of the Treasury's benchmark 10-year note was down fractionally, while its yield rose to 4.61 percent.
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