Stocks climb as investors shake off inflation worries
By MARLEY JAY, AP Markets Writer
NEW YORK (AP) — U.S. stocks are closing in on their fourth gain in a row Wednesday as banks climb along with bond yields. The increase in rates came after the government said consumer prices climbed in January at a rate that was faster than economists had expected. There were few signs of the worries about inflation that sent stocks falling in the last few weeks, as technology, industrial and consumer-focused companies also rose.
After tumbling 10 percent in nine days, the Standard & Poor's 500 index is up 4.5 percent in the current winning streak.
KEEPING SCORE: The Standard & Poor's 500 index rose 36 points, or 1.4 percent, to 2,699 as of 3:15 p.m. Eastern time. The Dow Jones industrial average added 257 points, or 1 percent, to 24,897. The Nasdaq composite climbed 132 points, or 1.9 percent, to 7,145. The Russell 2000 index of smaller-company stocks rose 27 points, or 1.8 percent, to 1,522.
PRICE REPORT: Excluding volatile items like food and energy, prices paid by consumers rose 0.3 percent in January. That's the most in a year. Stocks started slumping Feb. 1 after reports of greater wage growth caused investors to worry about faster inflation. Inflation has been very low for years, and if that changes, it could prompt the Federal Reserve to raise interest rates more rapidly. Higher interest rates act as a check on the economy by making it more expensive for businesses and individuals to borrow money.
The reaction to the gains in consumer prices was relatively calm Wednesday. The yield on the 10-year Treasury note rose to 2.91 percent, its highest mark in four years, from 2.84 percent the day before. That hurt shares of high-dividend companies like real estate investment trusts and utilities. Those stocks are often compared to bonds because of their big dividend payments and relatively steady prices, but investors find them more appealing when bond yields are falling.
RETAIL SALES: American cut back on purchases of cars, furniture and a variety of other products in January and the Commerce Department also lowered its estimate for shopping in December. The surprise slowdown comes after a three-month stretch of sizzling consumer activity, from September through November, which had fueled the most robust holiday sales in a decade.
Still, retailers mostly traded higher. Amazon rose $34.54, or 2.4 percent, to $1,449.05 and Target rose $1.65, or 2.2 percent, to $75.53. Tiffany added $2.13, or 2.1 percent, to $103.09. Nike picked up $1.95, or 3 percent, to $67.82.
THE QUOTE: "I think the fears of the economy overheating have been a little bit balanced out with the combination of these two numbers," said Katie Nixon, chief investment officer for Northern Trust Wealth Management. "The bond market is not suggesting that runaway inflation is a deep concern."
Nixon said she doesn't expect inflation to increase very much, but it can be unpredictable from month to month, and it could go higher as people who received tax cuts or bonuses spend their extra pay.
SHOWTIME: Netflix climbed after the streaming video company said it signed another big-name TV writer and producer to a production deal. According to reports, "Glee" and "American Horror Story" producer Ryan Murphy received a $300 million deal that will span five years. He had worked with Twenty-First Century Fox. In August Netflix announced a deal with "Scandal" and "Gray's Anatomy" creator and producer Shonda Rhimes.
Netflix climbed $9.97, or 3.9 percent, to $268.24.
DOES HE GET EXTRA GUAC? Chipotle Mexican Grill soared after naming Taco Bell CEO Brian Niccol to lead the company. Chipotle has been hit hard by food safety scares over the last few years and has had trouble winning back customers. Niccol launched breakfast at Taco Bell and also introduced mobile ordering from its restaurants, and investors felt he might help the company improve its fortunes. Founder Steve Ells resigned as CEO in November.
The stock rose $38.31, or 15.2 percent, to $289.64. It traded above $700 in mid-2015.
WATCH THIS: After years of declines, watchmaker Fossil soared $8.50, or 94 percent, to $17.54 after it did far better than Wall Street expected in the fourth quarter. The stock was worth more than $100 at the end of 2014, but plunged as competition from smart watches and fitness trackers eroded its sales.
ENERGY: U.S. crude rose $1.41, or 2.4 percent, to $60.60 a barrel in New York. Brent crude, used to price international oils, gained $1.64, or 2.6 percent, to $64.36 a barrel in London.
Wholesale gasoline added 3 cents to $1.71 a gallon. Heating oil rose 5 cents to $1.88 a gallon. Natural gas lost 1 cent to $2.59 per 1,000 cubic feet.
METALS: Gold jumped $27.60, or 2.1 percent, to $1,358 an ounce. Silver rose 35 cents, or 2.1 percent, to $16.88 an ounce. Copper picked up 7 cents, or 2.3 percent, to $3.24 a pound.
CURRENCIES: The dollar fell to 107.09 yen from 107.69 yen. The euro dipped to $1.2435 from $1.2355.
OVERSEAS: The DAX in Germany rose 1.2 percent and the French CAC 40 added 1.1 percent. The FTSE 100 in Britain picked up 0.6 percent. Japan's benchmark Nikkei 225 slipped 0.4 percent after its economy grew at a slower-than-expected pace in the fourth quarter. South Korea's Kospi gained 1.1 percent and Hong Kong's Hang Seng rose 2.3 percent.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP . His work can be found at https://apnews.com/search/marley%20jayt .Associated Press