Dow poised for second-best week of 2013
By KEN SWEET
The Associated Press | September 14,2013
AP file photo
Traders work on the floor at the New York Stock Exchange in New York.
NEW YORK — The Dow Jones industrial average is heading toward its second-best week of the year.
The index got a boost from two economic reports, one showing that inflation remained tame in August and the other showing Americans spent more.
The Dow Jones industrial average rose 71 points, or 0.5 percent, to 15,371 as of 1:50 p.m. Eastern Daylight Time. The index could close up three percent this week, the best five-day performance since Jan. 4.
The Dow got a lift from Intel. Analysts at Jefferies & Co. said Intel may be able to increase its sales with power-efficient chips. Intel rose 66 cents, or 3 percent, to $23.29.
The Standard & Poor’s 500 index rose four points, or 0.3 percent, to 1,688. The Nasdaq composite index was up five points, or 0.1 percent, to 3,721. The S&P is on pace for its best week since July.
Traders had a few economic reports to work through. The Commerce Department said Americans increased their spending modestly in August, roughly 0.2 percent, half of what economists expected.
The sales report was a mixed bag. Shoppers spent more on cars, electronics and furniture, but they didn’t buy much else. Last month, several retail chains including Nordstrom, Macy’s and Wal-Mart cut their profit forecasts for the year.
The government also reported that wholesale prices rose 0.3 percent last month. Over the past year, prices have only gained 1.4 percent, a sign that inflation remains modest. One thing driving wholesale prices higher was energy, which spiked as a conflict with Syria appeared likely.
Trading was light as Wall Street headed into the weekend and the Jewish holiday of Yom Kippur starts at sundown. About 2.8 billion shares traded on the New York Stock Exchange by the early afternoon, versus the 6.5 billion traded on an average day.
Investors waited for the Federal Reserve’s policy meeting on Sept. 17-18, when the central bank is expected to decide the future of its bond-buying program.
“There’s a lot of ‘wait and see’ going on until the Fed meeting next week,” said Frank Davis, director of sales and trading at LEK Securities.
The Fed is buying $85 billion in bonds each month, and the consensus among investors is that the central bank will decide to reduce its buying to about $75 billion or $80 billion a month. The question is no longer whether the Fed will cut back on its bond buying but by how much, said Scott Clemons, chief investment strategist with Brown Brothers Harriman Wealth Management.
September has been very strong for stocks so far. The Dow is up 3.8 percent and the S&P 500 has gained 3.4 percent.
In corporate news, Ulta Salon, Cosmetics & Fragrances surged $17.47, or 18 percent, to $117.60. The company reported a 28 percent increase in quarterly profit, thanks to stronger sales at its growing chain of stores.
Galena Biopharma plunged 36 cents, or 16 percent, to $1.92 after the company sold 17.5 million shares of stock at $2 a share.