Stocks gain on encouraging news about jobs, spending
NEW YORK -- Better news on jobs and consumer spending pushed stocks higher Thursday.
The Dow Jones industrial average and the Standard & Poor's 500 index rose for a third straight day. Bond yields fell for a second day, easing worries that a sudden spike in interest rates could hurt the economy.
Consumer spending rose 0.3 percent last month as incomes increased at the fastest pace in three months, the government reported. The number of Americans seeking unemployment benefits fell 9,000 to 346,000 last week. The report added to evidence that the job market is improving modestly.
Stocks have rallied since Tuesday as investors took advantage of lower prices after a sell-off that lasted till Monday. The plunge came after Federal Reserve Chairman Ben Bernanke said that the central bank could cut back on its stimulus later this year and possibly end it next year, if the economy continued to improve.
The Dow sank 560 points over Wednesday and Thursday of last week. Even with the gains this week the index is still 293 points below where it was June 18, the day before the Fed laid out its plans for how it might wind down its stimulus.
The central bank is buying $85 billion in bonds every month to hold down long-term interest rates and encourage borrowing and spending. Fed stimulus has underpinned a stock market rally that started in March 2009 by encouraging investors to put money into risky assets.
"What's driving that market up is that people are realizing that they are in a 'win-win' situation," said Rick Robinson, a regional Chief Investment Officer at Wells Fargo Private Bank. "If you have good economic data that should be good for stocks, if you have poor economic data ... that means the Fed will probably have its (stimulus) longer."
The Dow closed up 114.35 points, or 0.8 percent, to 15,024.49. The S&P 500 index climbed 9.94 points, or 0.6 percent, to 1,613.20.