Stocks edge higher for first time in four days10:41 am | August 20, 2013
NEW YORK (AP) — Stocks edged higher for the first time in five days Tuesday as better results from Best Buy and other retailers lifted the broader market. Bonds yields, which had been rising sharply for the last several days, pulled back some, bringing relief to investors worried about higher interest rates.
The Dow Jones industrial average rose 19 points, or 0.1 percent, to 15,030 in the first hour of trading. The Standard & Poor’s 500 index rose four points, or 0.2 percent, to 1,650 and the Nasdaq composite added 13 points, or 0.4 percent, to 3,602.
Best Buy and Urban Outfitters rose sharply in early trading, leading an advance in the retail sector.
Best Buy rose $3.03, or 10 percent, to $33.79, the biggest gain in the S&P 500. The electronics retailer said it earned 32 cents per share in the last three months, much better than the 12 cents per share analysts expected. Most of the growth came from cost-cutting and focusing on online sales.
Urban Outfitters jumped $3.47, or 9 percent, to $43.35. The Philadelphia-based teen retailer reported a 25 percent surge in second-quarter income as sales rose across nearly all its brands.
Home Depot earned $1.24 per share in the three months ending Aug. 4, three cents better than analysts’ expectations. The Dow member also raised its full-year earnings and sales outlook, due in large part to the improving conditions in the housing market. However, Home Depot’s stock edged down 41 cents, or 0.6 percent, to $74.75.
The better news on retailers was a respite for investors, who have spent the last week and a half getting disappointing earnings and sales outlooks from some of the nation’s largest store chains. Wal-Mart, Macy’s, Kohl’s and Saks all cut their sales forecasts, raising worries that the American consumer might be cutting back.
“The fact that some of these retailers were giving mixed signals was somewhat disconcerting,” said Phil Orlando, chief equity market strategist with Federated Investors.
It wasn’t all good news in the retail sector, however. Barnes & Noble plunged 16 percent after the bookseller’s first-quarter loss more than doubled and the company’s chairman called off his offer to buy the company’s stores. Excluding one-time items, Barnes & Noble lost 86 cents per share, more than the 81 cents Wall Street analysts had expected.
In the bond market, the source of a lot of investor worries recently, yields declined modestly after nearly two weeks of increases. The yield on the benchmark U.S. 10-year Treasury note fell to 2.83 percent from 2.88 percent late Monday.
Bond yields are important because they are used to set interest rates on many kinds of loans, including mortgages. Investors have worried that a sharp rise in borrowing costs could disrupt the recovery in the U.S. economy.
The Federal Reserve has been buying $85 billion worth of bonds every month to keep interest rates low and encourage borrowing and hiring. Now that the economy appears to be on the mend, investors expect the Fed to cut back on its purchases as soon as its September policy meeting.
“We’re not talking about the Fed pulling the plug on the economy here,” Orlando said. “We’re talking about the Fed looking to normalize bond yields because the economy is improving.”