Stocks climb as stronger economic growth cheers investors
AP Markets Writer
NEW YORK – U.S. stocks climbed Wednesday as investors cheered a report of stronger economic growth. Technology companies, retailers and travel providers all made solid gains.
The Commerce Department raised its estimate for economic growth and said the U.S. gross domestic product grew at its fastest pace in two years between April and June. Stocks were wobbly at the outset, but investors’ concerns about tensions between the U.S. and North Korea appeared to ease and stocks moved higher as the day wore on. Along with technology companies and consumer-focused firms, health care companies and banks finished higher. Big names like Microsoft, Amazon and Facebook made some of the biggest gains.
“For all the tough times we’ve had the last couple of weeks, the thing that’s kept the market afloat is the strong economic data,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management. With more economic reports coming over the next few days, Schutte said investors will be looking for evidence of higher pay and greater inflation, and said stocks should keep rising as long as the economy remains in good shape and inflation doesn’t pick up.
The Standard & Poor’s 500 index climbed 11.29 points, or 0.5 percent, to 2,457.59. The Dow Jones industrial average picked up 27.06 points, or 0.1 percent, to 21,892.43. The Nasdaq composite gained 66.42 points, or 1.1 percent, to 6,368.31 as technology companies rose for the third day in a row. The Russell 2000 index of smaller-company stocks added 7.64 points, or 0.6 percent, to 1,391.32.
The government raised its GDP projection from last month, and the second-quarter estimate is much better than the first quarter, when growth was 1.2 percent. Meanwhile, private businesses added 237,000 jobs in August with broad gains across several industries including construction, manufacturing and leisure and hospitality, according to a survey by payroll processor ADP.
Chipmaker Analog Devices advanced after it announced strong results in the third quarter along with a better-than-expected revenue forecast for the current period. Its stock jumped $4.17, or 5.2 percent, to $83.72. Microsoft gained 96 cents, or 1.3 percent, to $74.01 and Facebook picked up $1.87, or 1.1 percent, to $169.92. Amazon rose $13.53, or 1.4 percent, to $967.59, and Bank of America climbed 41 cents, or 1.7 percent, to $23.87.
Gasoline prices spiked to two-year highs and oil prices continued to fall as the Gulf region was inundated with rain by Tropical Storm Harvey, which has knocked out significant oil drilling and refining capacity. On Tuesday the largest oil refinery in the U.S. was shut down and the operator of a major pipeline carrying fuel to the East Coast said it was running at a reduced rate.
The tropical storm has dumped a record amount of rain on the Gulf Coast. It made landfall again in Louisiana overnight. Authorities say more than 20 people have died in the storm and more than 32,000 people were in shelters in Texas alone.
Wholesale gasoline rose another 10 cents, or 5.7 percent, to $1.88 a gallon. Benchmark U.S. crude lost 48 cents, or 1 percent, to $45.96 a barrel in New York while Brent crude, the international standard, fell $1.14, or 2.2 percent, to $50.86 a barrel in London.
President Donald Trump stumped for tax cuts in an afternoon speech in St. Louis, and while investors want to see taxes come down, Wall Street’s reaction was muted.
“Right now expectations are low enough that if anything gets done, Wall Street will cheer it,” said Schutte, of Northwestern Mutual.
The Food and Drug Administration approved the first treatment that genetically engineers patients’ own blood cells to seek and destroy childhood leukemia. The drug, Kymriah, is made by Novartis, and several other companies are working on similar treatments. They are called CAR-T therapies, and they are being developed for blood cancers and maybe other tumors, too.
The approval wasn’t a surprise to investors, and Novartis stock dipped 88 cents, or 1.1 percent, to $82.74. Gilead Sciences rallied, however. Earlier this week the company agreed to buy CAR-T drug developer Kite Pharma for $11.9 billion. Its stock gained $5.49, or 7.2 percent, to $81.23. Juno Therapeutics, which is studying a similar treatment, lost $3.52, or 8 percent, to $40.29.
Bond prices inched lower after a big jump the day before. The yield on the 10-year Treasury note rose to 2.14 percent from 2.13 percent.
In other energy trading, heating oil added 1 cent to $1.67 a gallon. Natural gas lost 4 cents to $2.94 per 1,000 cubic feet.
Gold fell $4.80 to $1,314.10 an ounce. Silver dipped 2 cents to $17.40 an ounce. Copper lost 2 cents to $3.06 a pound.
The dollar rose to 110.36 yen from 109.71 yen. The euro declined to $1.1890 from $1.1992.
European stocks bounced back after several days of losses. Germany’s DAX and the French CAC 40 both rose 0.5 percent and FTSE 100 in Britain added 0.4 percent. In Japan, the Nikkei 225 rose 0.7 percent and South Korea’s Kospi gained 0.3 percent. Hong Kong’s Hang Seng jumped 1.2 percent.