Stocks Rise After Economic Reports : dont drink and drive, kennyboy
By THE ASSOCIATED PRESS
Published: August 24, 2007
Filed at 12:48 p.m. ET
NEW YORK (AP) -- Stocks advanced sharply Friday, picking up momentum after upbeat economic readings countered some of the bleak sentiment on Wall Street in recent weeks and investors appeared to sense some stability in the markets.
Stocks went from flat to higher early Friday after a stronger-than-expected reading on new homes sales for July. That followed a durable goods report that topped expectations.
''It's really day-by-day with all this news,'' said Nicholas Raich, director of equity research at National City Private Client Group in Cleveland, referring to economic data and concerns about faltering mortgages and upheaval in the credit markets. He said the latest economic readings boost a sense that the Federal Reserve isn't likely to cut interest rates before its Sept. 18 meeting.
''Obviously the market is adjusting to that probably not occurring. There were fears just a few weeks ago that the U.S. housing woes were going to impact the global environment.''
In midday trading, the Dow Jones industrial average rose 67.07, or 0.51 percent, to 13,302.95.
Broader stock indicators advanced. The Standard & Poor's 500 index rose 7.42, or 0.51 percent, to 1,469.92. The Nasdaq composite index rose 14.10, or 0.55 percent, to 2,555.80.
Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.65 percent from 4.63 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose.
Oil prices rose 62 cents to $70.45 on the New York Mercantile Exchange, giving a boost to energy companies such as Exxon Mobil Corp., the biggest gainer among the 30 stocks in the Dow Jones industrials. Crude prices had fallen this week after it appeared there was no major damage to oil rigs as Hurricane Dean pushed through Mexico.
In economic news, the Commerce Department said new home sales rose 2.8 percent in July, after falling 4 percent in June. The increase in July lifted sales to a seasonally adjusted annual rate of 870,000 units. A second report showed that orders to factories for big-ticket goods jumped 5.9 percent in July, the most in 10 months.
The housing report appeared to ease concerns that the U.S. economy might tip into recession because of a skidding housing market and tightening access to credit.
However, the upbeat reports could still disappoint investors who had been hoping weak readings would goad the Federal Reserve into cutting its benchmark fed funds rate. The stock market tumult in recent weeks and jitters in the credit market had boosted expectations among some investors that the central bank would have to intervene with a cut in the fed funds rate at or even before its Sept. 18 meeting.
But the Fed policymakers and stock market investors this week appeared to have reached a bit of a truce, if perhaps an uneasy one, with the Fed acknowledging it stood ready to try to fend off a calamitous seizing up of the credit markets. However, the central bankers appeared determined to deploy a measured response and not necessarily give in to a Street looking for a return of easy access to cash.
Investors appeared heartened after Senate Banking Committee Chairman Christopher Dodd, following a meeting with Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson on Tuesday, said policymakers planned to use ''all tools available'' to keep the markets upright.
The Fed a week ago cut the discount rate, the interest it charges to lend directly to banks, sending stocks sharply higher and giving Wall Street reason to believe the Fed would be there to bail out the troubled market.
''I think we've stabilized a bit since the Fed has lowered the discount rate,'' Raich said. ''That has calmed the market and eased some fears because we have a Fed that is willing to step in and help out.''
In corporate news, retailer Gap Inc. late Thursday posted a 19 percent rise in quarterly earnings and announced plans for a $1.5 billion share repurchase. However, rival Aeropostale Inc.'s quarterly results came in below Wall Street estimates. Gap rose $1.03, or 5.9 percent, to $18.43, while Aeropostale fell 66 cents, or 2.9 percent, to $22.46.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 516 million shares.
The Russell 2000 index of smaller companies rose 3.73, or 0.47 percent, to 791.98.
Overseas, Britain's FTSE 100 rose 0.37 percent, Germany's DAX index slipped 0.06 percent, and France's CAC-40 rose 0.83 percent. In Asia, Japan's Nikkei stock average closed down 0.41 percent. Hong Kong's Hang Seng Index fell 0.20 percent.
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