Stocks snap losing streak
NEW YORK — Stocks notched their first gain of the week Thursday after Spain announced severe budget cuts intended to convince the world that it can meet deficit-reduction targets.
It was the best day for the U.S. market since Sept. 13, when Federal Reserve Chairman Ben Bernanke announced further steps by the central bank to speed the economic recovery.
Stocks were also helped by speculation that the central bank of China will act soon to help the world’s No. 2 economy.
The Dow Jones industrial average climbed 72.46 points, or 0.5 percent, to close at 13,485.97. It was the Dow’s first gain in five trading sessions. The average was up as much as 109 points after the Spain announcement.
The Standard & Poor’s 500 index, after five days of declines, closed up 13.83 points, or just shy of 1 percent, at 1,447.15. The Nasdaq composite index rose 42.90 points to 3,136.60.
The Nasdaq and S&P were helped by a jump in Apple stock, reversing three days of declines. Apple gained $16.14, or 2.4 percent, to $681.32 despite an analyst’s report reducing estimates for shipments of iPhones later this year.
As fear grew that Spain will need an international bailout, the finance minister said a draft budget for 2013 cuts overall spending by (euro) 40 billion, or about $51 billion. He said cuts for ministries would average almost 9 percent.
The cuts are meant to show world investors and other countries that Spain can meet fiscal targets.
“That’s the only major thing that’s happened,” said Dan Greenhaus, chief global strategist for the brokerage BTIG. “It’s an excuse to rally the stock market.”
Technology stocks and energy companies made the biggest gains. Utility stocks, which tend to do well when investors are fearful, were the only industry group in the S&P to fall.
The market gains started earlier, in Asia, helped by expectations that the People’s Bank of China will act soon. China’s biggest steelmaker said Thursday it has shut down a mill in Shanghai, a sign of weakening growth.
Stocks rose 0.5 percent in Japan and 1.1 percent in Hong Kong.
In Europe, stocks came back from one of their worst days in months. The benchmark stock index finished 0.7 percent higher in France and 0.2 percent higher in Germany and Britain.
Borrowing costs for financially troubled Spain and Italy also edged down, a positive sign.
In the U.S., demand for government bonds fell, generally an indication that investors are more willing to embrace risk.
The price of crude oil rose $1.87 per barrel to $91.85 as concerns mounted about a potential military confrontation over Iran’s nuclear program. Oil had dropped $9 a barrel in two weeks.
In other news:
DISCOVER FINANCIAL: It rose $2.69, or 7.3 percent, to $39.71. It reported a slight earnings decline in its latest quarter but beat Wall Street expectations. It also said credit card use increased and more customers paid off cards on time.
GENERAL ELECTRIC: It hit a four-year high after the company told analysts it expects industrial revenue to rise about 10 percent this year.
MORTGAGE RATES: Average U.S. rates on fixed mortgages fell again to new record lows. The decline suggests the Federal Reserve’s stimulus efforts may be having an impact on mortgage rates.
FREDDIE MAC: A federal judge has tossed out a lawsuit against Freddie Mac that accused the mortgage giant and three top executives of understating the level of risky mortgages the company held before the housing bubble burst.
NIKE: Its fiscal first-quarter net income fell 12 percent as higher sales of its clothing and footwear brands were offset by increased costs and ad spending.
CAMPBELL SOUP: It plans to close two U.S. plants, eliminating more than 700 jobs, as it looks to trim costs amid declining canned soup consumption. The food company has about 19,900 employees.
H&M: Swedish fashion retailer Hennes and Mauritz plans to ramp up its expansion in the coming months, even though problems associated with Europe’s debt crisis and a heat wave in key markets capped earnings in the third quarter.
RIM: BlackBerry-maker Research In Motion posted another large loss in the second quarter but not as bad as analysts expected. Its stock surged more than 18 percent to $8.44 in after-hours trading.
ZEEBOX: Comcast and its NBCUniversal subsidiary are taking a stake in zeebox, the maker of a so-called “second screen” app that people can fiddle with on mobile devices while they watch TV.