Created on Friday, 17 May 2013 Written by STEVE ROTHWELL,AP Market Writer
NEW YORK (AP) — Encouraging news about the U.S. economy pushed stocks higher on Wall Street Friday.
A gauge of future economic activity rose more than analysts had expected, as did a measure of consumer confidence, adding to evidence that the economy is steadily recovering.
Stocks have surged to record levels this year on optimism about the economy and record corporate earnings. The market is also being supported by ongoing stimulus from the Federal Reserve, which is keeping long-term borrowing costs at historically low levels.
"This slow but relatively steady growth, that keeps inflation in check and keeps interest rates low, is actually a pretty healthy environment for the stock market," said Liz Ann Sonders, chief investment strategist at Charles Schwab & Co. "Right now we are very optimistic."
General Motors rose $1.13, or 3.5 percent, to $33.53. The automaker's stock is trading above the $33 price of its November, 2010 initial public offering for the first time in two years.
Northrop Grumman gained $2.73, or 3.5 percent, to $81.75 after the defense contractor said its board approved the repurchase of another $4 billion in stock, and that it plans to buy back a quarter of its outstanding shares by the end of 2015.
The Dow Jones industrial average rose 55 points, or 0.4 percent, to 15,288 as of 1:42 p.m. Eastern Daylight Time. The index is up 1.1 percent this week and 16.7 percent for the year.
The Standard & Poor' 500 index climbed eight points, or 0.5 percent, to 1,658. The gauge is up 1.5 percent this week and has gained 16.3 percent this year.
After some lackluster reports on the economy Thursday, including slowing manufacturing and an increase in applications for unemployment benefits, Friday's reports were a tonic for investors.
The Conference Board said its index of leading economic indicators rose 0.6 percent last month after a revised decline of 0.2 percent in March. The index is intended to predict how the economy will be doing in three to six months.
The University of Michigan's preliminary survey of consumer confidence climbed to 83.7. Economists had predicted that the gauge would climb to 76.8.
As well as giving stocks a lift, the reports also pushed government bond yields higher. The yield on the 10-year Treasury rose to 1.94 percent from 1.88 percent Thursday as investors favored riskier assets.
The yield, which moves inversely to its prices, has jumped since May 3 after the government reported that hiring picked up sharply in April. The note started trading that day at 1.63 percent, its low for the year.
The move to riskier assets also gave small stocks a lift. The Russell 2000, an index of smaller companies, rose 0.7 percent to 992. The index has surged this month and is performing better than both the Dow and the S&P 500 for the year. It's up 16.9 percent so far in 2013.
Small stocks are doing well partly because they are more focused on the U.S., which is recovering, and don't get as much revenue from recession-plagued Europe as larger companies do.
Gold fell for a seventh straight day, dropping $22.20, or 1.6 percent, to $1,364 an ounce. The precious metal is down almost 20 percent this year and has fallen out of favor as an alternative investment as the stock market has surged this year.
The demand for gold as an alternative asset is also being undermined by a surge in the U.S. dollar. The U.S. currency advanced against both the euro and the yen Friday.
The price of oil rose 94 cents, or 1 percent, to $96.08 a barrel.
The Nasdaq composite climbed 16 points, or 0.5 percent, to 3,481. The technology heavy stock index got a small boost from Facebook, which climbed 22 cents, or 0.8 percent, to $26.39 on the one-year anniversary of its initial public offering.
Facebook slumped in the first four months after its market debut on concern that it wasn't doing enough to develop mobile advertising. Despite recovering since then, it's still trading below its IPO price of $38.
Among other stocks making big moves;
— J.C. Penney fell 48 cents, or 2.5 percent, to $18.32 after the retailer reported a loss that was worse than analysts' already dismal estimates. The retailer is reeling from the fallout from a failed turnaround plan orchestrated by its former CEO Ron Johnson, who was ousted last month after less than a year and a half on the job.
— Autodesk fell $2.98, or 7.1 percent, to $36.95, after the design software company posted disappointing first-quarter results and lowered its forecasts for the year.