Closing Market Report
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Rate speculation helps raise stocks
By Ellen Simon
Associated Press
NEW YORK » Stocks inched higher in light trading yesterday after government data indicated that the economy was growing at a slower pace, raising investors' hopes that moderating economic growth might halt the Federal Reserve's streak of interest rate hikes. The major indexes ended the week narrowly mixed.
Yesterday's gains were capped as General Electric Co., Advanced Micro Devices Inc. and Alcoa Inc. fell and bonds declined sharply, sending the yield on the 10-year Treasury bill above 5 percent for the first time since 2002.
The 5 percent yield could have acted as a "psychological barrier," said Mike Malone, trading analyst, Cowen & Co. The fact that it didn't "suggests yields could move higher in the next week, keeping some pressure on equities."
The day's economic news quieted investors' interest rate fears. Retail sales for March were slightly higher than economists expected, as were weekly unemployment claims, while business inventories were slightly leaner. Together, the reports support "the Goldilocks view of the economy; the economy is still growing at a healthy pace, there are no signs of significant increases in inflation," said Brian Bush, director of equity research, Stephens Inc.
The Dow Jones industrial average rose 7.68, or 0.07 percent, to 11,137.65.
Broader stock indicators were slightly higher. The Standard & Poor's 500 index rose 1.00, or 0.08 percent, to 1,289.12 and the Nasdaq composite index rose 11.43, or 0.49 percent, to 2,326.11.
The yield on the 10-year Treasury note rose to 5.05 percent from 4.98 percent late Wednesday.
Crude oil futures rose. A barrel of light crude settled at $69.32, up 70 cents, in trading on the New York Mercantile Exchange. The U.S. dollar fell lower against other major currencies. Gold prices fell.
The fuzzy outlook on interest rates didn't get any clearer following a speech by U.S. Federal Reserve Governor Donald Kohn, who said he's unsure how much tightening will be needed to keep inflation low, especially because labor markets are tight.
The Fed has raised official interest rates 15 straight times since mid-2004. The current rate is 4.75 percent and the Fed is widely expected to raise rates to 5 percent next month.
While the approaching holiday weekend kept many investors away -- most financial markets around the world were closing for Good Friday -- many traders were also making few moves in advance of next week's cascade of earnings and economic reports.