Better economic news boosts stocks

Published on NewsOK Modified: March 20, 2014 at 1:59 pm •  Published: March 20, 2014
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NEW YORK (AP) — The stock market rose Thursday as encouraging news on the economy outweighed concern that interest rates could start climbing sooner than expected. Stocks erased all of their losses from the day before, when Fed Chair Janet Yellen suggested that rates could rise next year.

KEEPING SCORE: The Standard & Poor's 500 index rose 11 points, or 0.6 percent, to 1,872 as of 2:35 p.m. Eastern time. The Dow Jones industrial average gained 116 points, or 0.7 percent, to 16,338. The Nasdaq composite climbed 17 points, or 0.4 percent, to 4,325.

GREEN SHOOTS: A measure of the U.S. economy's health rose in February by the largest amount in three months, suggesting growth will accelerate following a severe winter. The Conference Board's index of leading indicators increased 0.5 percent following a slight 0.1 percent rise in January and a 0.1 percent decline in December. The Federal Reserve Bank of Philadelphia said separately that manufacturing rebounded in that region in March as new orders increased.

THE YELLEN EFFECT: Stocks fell on Wednesday and opened lower Thursday as investors mulled comments from Yellen, who set the stage for a possible interest rate hike by the middle of next year. The Fed on Wednesday dropped its previous stance of 6.5 percent unemployment for considering a rate hike. Unemployment is at 6.7 percent.

RISING RATES, STRENGTHENING ECONOMY: Higher interest rates can be seen as a positive, if taken in the context of an improving economy, said Peter Cardillo, chief market economist at Rockwell Global Capital. "The good news is that if interest rates go up, that means that the economy is getting stronger and that favors Corporate America in terms of earnings growth," Cardillo said.

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