Stocks rise as manufacturing activity index hits highest level in nearly four years

February 20, 2014
FINANCIAL MARKETS
Stocks rise as plant index posts gain

U.S. stocks climbed Thursday after a reading on manufacturing activity hit its highest level in nearly four years and news about Facebook and Tesla drove their shares to record highs.

The major indexes swung between slight gains and losses in early trading but were clearly in the black after noon and didn’t look back. The Standard & Poor’s 500-stock index ended less than 0.5 percent below the record close of 1,848.38 it hit last month.

Factory activity accelerated at its fastest pace in nearly four years in February, according to Markit’s preliminary U.S. Manufacturing Purchasing Managers Index. That was a bullish economic indicator after a string of weaker-than-expected reports.

New claims for unemployment insurance fell in the latest week, boding well for the job market, but the Philadelphia Fed’s gauge of manufacturing activity in its region unexpectedly contracted in February.

The stock market has selectively shrugged off tepid data, pinning recent weakness on the impact of extremely cold weather and massive snow rather than weakening fundamentals.

“The U.S. [Markit] PMI number was probably not as good as it seems. There could be some noise there, but it certainly is a good number,” said Paul Zemsky, head of asset allocation at ING Investment Management in New York. “Overall, I think the data is a little equity-positive. I don’t think this is sufficient to take us past 1,850 [on the S&P 500]. We need a reasonably good jobs number for that.

The Dow Jones industrial average rose 92.67 points, or 0.58 percent, to end at 16,133.23. The S&P 500 gained 11.03 points, or 0.60 percent, to finish at 1,839.78, and the Nasdaq composite index added 29.591 points, or 0.7 percent, to close at 4,267.55.

Social networking giant Facebook said late Wednesday it would buy mobile-messaging start-up WhatsApp for $16 billion in cash and stock. After initially falling on the news, Facebook shares closed up 2.3 percent, at $69.63 after earlier hitting a record high of $70.11.

Tesla shares surged 8.4 percent, to $209.97, after hitting an intraday record of $215.21. The electric car maker reported fourth-quarter results that topped expectations and said deliveries of its luxury sedan would surge more than 55 percent this year.

— Reuters

FINANCE
Mortgage rates are up, Freddie Mac says

Mortgage rates wandered upward last week, according to data released Thursday by Freddie Mac.

The 30-year fixed-rate average edged up to 4.33 percent. It was 4.28 percent a week ago and 3.56 percent a year ago. The 30-year fixed rate went up for the second week in a row after falling for five straight weeks. It has remained below 4.5 percent since early January.

The 15-year fixed-rate average grew to 3.35 percent, up from 3.33 percent a week ago and 2.77 percent a year ago. The 15-year fixed rate has stayed below 3.5 percent for six weeks.

Hybrid adjustable-rate mortgages also gained. The five-year ARM average rose to 3.08 percent. The average was 3.05 percent a week ago and 2.64 percent a year ago.

“Mortgage rates crept up further following the uptick in the 10-year Treasury yield as minutes of the Federal Reserve’s last meeting indicated little possibility of a pause in the central bank’s reduction of bond purchases,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement.

Meanwhile, mortgage applications fell 4.1 percent last week, shows the latest data from the Mortgage Bankers Association.

— Kathy Orton

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