Stocks advanced modestly on Wednesday as easing worries about European finances helped investors set aside concerns resulting from the Federal Reserve’s latest Beige Book report. The beige book report on regional economic activity noted widespread signs of deceleration, causing some initial consternation but reports that the Portuguese government had successfully auctioned debt worth $1.3 billion pulled stocks back into the positive territory.
The Dow Jones Industrial Average advanced more than 46 points, or about 0.45%, to 10387. The blue-chip index, however, remains in the negative territory for the year. The Standard & Poor’s 500-stock index climbed 7 points, or 0.6%, to 1098.87. The tech-heavy Nasdaq Composite Index climbed 20 points, or 0.9%, to 2228.87. On the New York Stock Exchange, advancing shares beat those that fell in price by a two-to-one margin. The Vix fear factor retreated 2.3% to 23.26. Volume, however, remained thin.
A higher-than-estimated drop in jobless claims has sent this morning’s stock futures higher. Ahead of the opening bell, the Dow Jones industrial average futures are up 54 points, or 0.5%, at 10,446. Standard & Poor's 500 index futures have climbed more than 7 points, or 0.7%, to 1,106.50, while the Nasdaq 100 index futures have advanced almost 14 points, or 0.7%, to 1,891.
On Tuesday, all major indexes had dropped at least 1% amid reports European banks would need more capital to boost their balance sheets. The drop had sent the Dow average back into the red for the year. However, the successful Portuguese bond auction yesterday helped reduce those fears. The 10-year note dropped 16/32 in price as the yield increased to 2.654%, reflecting the gains in riskier asset plays.
Shares in industrial companies advanced, with Boeing BA adding 1.7% to $64.50 and Caterpillar CAT rising 1.5% to $70.74. Textron added 2.4% to $18.66. A Goldman Sachs upgrade of Staples Inc SPLS and Costco Wholesale Corp COST sent shares in those companies up 2% and 1%, respectively.
Twenty-four of the 30 DJIA components managed gains on the day, with shares of financial and multinational firms leading the charge. The easing European fears bolstered financial shares in particular. Topping the list of gainers, JP Morgan JPM added 2.2%, with Alcoa AA up 1.9%, General Electric GE up 1.7%, Pfizer PFE up 1.4%, and Bank of America BAC up 1.2%. A UBS UBS downgrade of Hewlett-Packard HPQ and Intel INTC sent shares in those companies off 2.8% and 1.2%, respectively.
S&P500 shares gained 0.6% to close at 1099; NASDAQ shares finished up 0.9% at 2229. Only one of the ten S&P500 industry sectors moved lower, as utility shares eased 0.4%. Upside moves were noted among financials (+0.9%) and industrials (+0.9%), followed by oil and gas (+0.8%), basic materials (+0.8%), consumer services (+0.8%), tech (+0.5%), telecommunications (+0.5%), health care (+0.5%), and consumer goods (+0.4%).
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