Stocks set records as prof­its rise

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - STAN CHOE

NEW YORK — U.S. stock in­dexes re­turned to records Tues­day as cor­po­rate prof­its con­tinue to come in bet­ter than an­a­lysts ex­pected.

The Stan­dard & Poor’s 500 rose 7.17 points, or 0.3 per­cent, to an all-time high of 2,477.08. It was the first gain for the in­dex in four days.

The Dow Jones in­dus­trial av­er­age rose 100.26, or 0.5 per­cent, to 21,613.43. The Nas­daq com­pos­ite rose 1.37 points, or less than 0.1 per­cent, to 6,412.17, and the Rus­sell 2000 in­dex of small-cap stocks jumped 12.33, or 0.9 per­cent, to 1,450.39. Both the Nas­daq and Rus­sell set records.

McDon­ald’s and Cater­pil­lar were among the big com­pa­nies that re­ported health­ier- than- fore­cast re­sults. Sharp moves higher in prices for oil, met­als and other com­modi­ties also helped lift com­pa­nies that pro­duce en­ergy and raw ma­te­ri­als. That more than off­set losses for health care com­pa­nies and stocks that pay rel­a­tively big div­i­dends, which were hurt by a rise in Trea­sury yields.

Lead­ing the way for the mar­ket were en­ergy stocks, which ben­e­fited from a sec­ond strong day for the price of oil. Bench­mark U.S. crude rose $1.55, or 3.3 per­cent, to

set­tle at $ 47.89 per bar­rel. Brent crude, the in­ter­na­tional stan­dard, gained $1.60, or 3.3 per­cent, to $50.20 a bar­rel.

That helped en­ergy stocks in the S&P 500 climb 1.3 per­cent, tied for the big­gest gain among the 11 sec­tors that make up the in­dex. Devon En­ergy rose $1.24, or 3.9 per­cent, to $32.98, for ex­am­ple, while Marathon Oil gained 46 cents, or 3.9 per­cent, to $12.34.

Fi­nan­cial stocks were also strong af­ter a pickup in in­ter­est rates raised ex­pec­ta­tions that banks could charge more for loans and pocket big­ger prof­its.

The yield on the 10-year Trea­sury note climbed to 2.32 per­cent from 2.26 per­cent late Mon­day. The two-year yield climbed to 1.38 per­cent from 1.36 per­cent, and the 30-year yield rose to 2.91 per­cent from 2.83 per­cent.

The rise in yields came as the Fed­eral Re­serve be­gan a two-day pol­icy meet­ing on in­ter­est rates.

The cen­tral bank has al­ready raised rates three times since De­cem­ber, but few in­vestors ex­pect it to make an­other move when it an­nounces its de­ci­sion to­day. Most ex­pect the next rate in­crease to come later this year.

It may not have shown on Tues­day, but many in­vestors are brac­ing for mar­kets to get shakier as the Fed­eral Re­serve moves fur­ther away from record-low in­ter­est rates and big stim­u­lus for the econ­omy. Con­trar­i­ans are also con­cerned about how much the stock mar­ket has climbed, and how smooth the ride has been, as ex­pec­ta­tions have built up this year that cor­po­rate prof­its will keep pil­ing higher.

“There’s a lot of hope built into the mar­ket at cur­rent lev­els,” said Rob McIver, portfolio man­ager at the $6.3 bil­lion Jensen Qual­ity Growth fund. “We’re cau­tion­ing in­vestors to be cautious and con­ser­va­tive.”

In the com­modi­ties mar­ket, nat­u­ral gas rose 5 cents to $2.94 per 1,000 cu­bic feet, heat­ing oil gained 5 cents to $1.57 per gal­lon and whole­sale gaso­line climbed 4 cents to $1.60 per gal­lon.

Met­als prices also climbed, which helped to lift shares of min­ing com­pa­nies and other raw-ma­te­rial pro­duc­ers. Cop­per jumped 11 cents, or 4 per­cent, to $2.85 per pound, while sil­ver rose 10 cents to $ 16.54 per ounce and gold slipped $2.20 to $1,252.10 an ounce.

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