Stocks Rise as Bond Yields Retreat
{{#rendered}} {{/rendered}}U.S. stocks closed higher Friday after a three-day slide as bond yields retreated and oil prices fell, easing worries about rising borrowing costs and inflation.
The Dow Jones industrial average shot up 157.66 points, or 1.19 percent, to end at 13,424.39. The Standard & Poor's 500 Index jumped 16.95 points, or 1.14 percent, to finish at 1,507.67. The Nasdaq Composite Index climbed 32.16 points, or 1.27 percent, to close at 2,573.54.
A flurry of encouraging corporate news, including a strong monthly sales report from McDonald's Corp. (MCD) lent support.
{{#rendered}} {{/rendered}}National Semiconductor Corp. (NSM) shares rose 15 percent after the analog chip maker reported higher-than-expected profit, adding to optimism about technology spending and helping lift the Nasdaq more than 1 percent.
Even with Friday's gains, stocks finished the week with their heaviest losses since the week ended March 2 as bond yields soared on concerns that global growth will boost inflation. Rising yields can cut into corporate profits and make takeovers more expensive as borrowing costs rise.
Stocks also got a lift from falling oil prices after a storm that threatened Mideast supplies petered out.
{{#rendered}} {{/rendered}}"After having been spooked by the rapidity with which long rates were rising, the market is regaining its footing, which makes some sense, seeing as the fundamentals haven't changed at all," said Michael Darda, chief economist at MKM Partners LLC in Greenwich, Connecticut.
"What we essentially had was a bond market that was absurdly valued, priced for several rate cuts, and we found out that those assumptions were as wrong as wrong could be. I see weakness in stocks as a buying opportunity."
For the week, the Dow ended down 1.78 percent, the S&P 500 fell 1.87 percent and the Nasdaq lost 1.54 percent.
{{#rendered}} {{/rendered}}The benchmark 10-year U.S. Treasury note was up 6/32, with the yield retreating to 5.114 percent, after peaking at 5.25 percent in earlier overseas trading.
Utility stocks, battered in the sell-off, climbed higher as the 10-year note's yield retreated. Utilities and other large-dividend payers had become less attractive to investors as bond yields soared earlier this week.
Shares of utility Constellation Energy Group gained 1.2 percent to $83.92 on the New York Stock Exchange. Entergy Corp. shares rose 2.4 percent to $106.80.
{{#rendered}} {{/rendered}}Shares of industrial conglomerates, particularly sensitive to increases in oil prices, rose as U.S. crude oil futures fell more than $2 a barrel. Alcoa (AA), the world's biggest aluminum company, advanced 1.9 percent to $39.66 and helped lift the Dow. United Technologies Corp. (UTX) climbed 2 percent to $70.23, while Boeing Co. (BA) added 1.4 percent to $98.19 — and together, they ranked as the Dow's biggest gainers.
McDonald's stock rose 2.4 percent to $51.41 on the NYSE after the world's biggest restaurant chain posted its largest monthly comparable sales increase in more than three years.
Tyco International Ltd.'s shares jumped 3.6 percent to $33.80, after the conglomerate's board late Thursday formally approved its separation into three publicly traded companies through a divided distribution to shareholders.
{{#rendered}} {{/rendered}}Semiconductor shares helped boost the Nasdaq Composite Index, with National Semi shares climbing to $29.58 on the NYSE. The Philadelphia Stock Exchange index of semiconductors rose 3.1 percent.
Shares of Qualcomm Inc. (QCOM) gained 2.1 percent to $41.87 on the Nasdaq after the company said demand for wireless chips is better than expected.
Trading was moderate on the NYSE, with about 1.57 billion shares changing hands, below last year's estimated daily average of 1.84 billion, while on Nasdaq, about 1.95 billion shares traded, also below last year's daily average of 2.02 billion.
{{#rendered}} {{/rendered}}Advancing stocks outnumbered declining ones by a ratio of more than 2 to 1 on the NYSE and on the Nasdaq.