Stocks higher in U.S.; in Europe, vows to save euro
ASSOCIATED PRESS September 21, 2012 9:40AM
Trader Peter Mancuso, right, works on the floor of the New York Stock Exchange Thursday, Sept. 20, 2012. A batch of worrying economic figures tugged stock markets slightly lower Thursday. Measures of manufacturing and business activity in both China and Europe slumped. (AP Photo/Richard Drew)
Updated: September 21, 2012 2:58PM
NEW YORK — U.S. stocks traded higher Friday, with investors latching on to a few mildly hopeful signs about the economy.
Shortly after noon Friday, the Dow Jones industrial average was up 43 points at 13,640. The Standard & Poor’s 500 was up six to 1,466. The Nasdaq composite index was up 16 to 3,192.
Homebuilder KB Home swung to a quarterly profit by selling pricier homes. The stock popped $1.46, or more than 11 percent, to $14.57.
Darden Restaurants, parent of Olive Garden and Red Lobster, also reported a higher profit in its latest quarter. The stock rose $2.47, or more than 4 percent, to $57.19.
Apple, propelled by the frenzy around the release of the iPhone 5, rose $6.12, or just less than 1 percent, to $704.82.
And in Europe, Italy’s premier and Greece’s prime minister met and repeated their conviction for “the absolute need to safeguard the integrity of the eurozone,” according to a statement from the Italian leader’s office. Spain appeared near to working out terms for requesting a bailout from Europe.
Both developments points to a Europe that, while still grappling with a heavy debt crisis, is committed to finding a solution.
Still, the market’s rise Friday and in recent weeks seems like a paradox against a backdrop of high unemployment, unimpressive economic growth and a looming fiscal cliff, when spending cuts and higher taxes could kick in this year.
That’s because the rise has been more about the old adage to not “fight the Fed” rather than hope that the economy is proving.
This week, the Bank of Japan agreed to a new program where it would buy assets to try to prop up the country’s market. Last week the Federal Reserve made a similar comment, and before that the European Central Bank did.
But the actions don’t mean the economy is improving. In fact, they mean quite the opposite: that the central banks think the economy is bad enough that it can’t survive on its own.
Timothy Leach, wealth management chief investment officer for U.S. Bank in San Francisco, described the central banks’ actions as positive, but said they’re buying time more than fixing underlying fiscal problems.
“But at least they’re taking some of the pressure off,” Leach said, “allowing policymakers some additional time to try to achieve those real solutions.”
Signs of the underlying trouble were abundant.
The Labor Department reported Friday that unemployment rose in 26 states last month. The World Trade Organization cuts its estimates for growth in global trade this year and next.
Darden, despite its higher profits, noted it has to rework the menu to attract customers wary about spending.
Greece still hasn’t agreed to a detailed plan to cut spending, which it must do to get the bailout money from Europe. Germany’s finance minister argued that Spain doesn’t need a second aid program, considering how it already got a bailout for its banks.