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Stock market moves higher after three days of losses
NEW YORK (AP) — A pair of better economic reports helped nudge the U.S. stock market up Thursday afternoon, even as the Japanese market plunged again.
The Standard & Poor’s 500 index was up 12 points, or 0.8 percent, to 1,624 as of 1 p.m. EDT. The index is coming off three days of losses and has dropped 1.1 percent so far this week.
“What we’re seeing this week is a battle” between two opposing themes, said Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Mass.
On one side, there are worries over what will happen when the Federal Reserve and other central banks pump less money into the financial system. On the other side, there’s rising optimism for the U.S. economic recovery, even as Europe and Japan falter.
“The underlying fundamentals of our economy are clearly doing much better,” Mr. McMillan said.
The latest positive news on the U.S. economy came early Thursday when the government said the number of Americans seeking unemployment benefits fell to 334,000, below what economists had expected.
The government also reported that U.S. retail sales increased 0.6 percent in May from April. That’s up from a 0.1 percent gain in April and the fastest pace since February.
The Dow Jones industrial average rose 98 points, or 0.7 percent, to 15,093. The Nasdaq composite rose 24 points, or 0.7 percent, to 3,424.
Anton Bayer, CEO of Up Capital Management in Granite Bay, Calif., thinks the stock market already has reached its high point for this year. The Federal Reserve has artificially propped up the economy, he thinks, which is why investors are nervous about what will happen when the central bank starts buying fewer bonds every month.
Mr. Bayer noted how the market has stumbled since Fed Chairman Ben S. Bernanke said the central bank could start pulling its stimulus as the economy gains strength. The Dow has lost about 300 points, or 2 percent, since May 21, the day before Mr. Bernanke gave his comments.
“What the markets are seeing is the economic engines are not being primed,” Mr. Bayer said. “The fear is of the stimulus going away and exposing an economy that is not really chugging along. It’s the big risk.”
In Japan, the benchmark Nikkei 225 index slumped 6.4 percent as doubts grew that Prime Minister Shinzo Abe’s economic turnaround plan will succeed. The Japanese market is down 20 percent from a high reached on May 22. Before its recent stumble, the index had surged 50 percent since the beginning of the year as traders hoped Mr. Abe’s plan would pull the world’s third-largest economy out of a two-decade slump.
In the U.S. government bond market, the yield on the 10-year Treasury note slipped to 2.18 percent from 2.23 percent late Wednesday.
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