Interest Rates, Job Losses Weigh on Stocks
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U.S. stocks gained last week, with all of the advance coming on the week's first day, as news that companies such as Lowe's and Sears beat earnings projections was offset by concerns that the government faces higher interest rates to finance the bailout of the financial industry.
The Standard & Poor's 500-stock index gained even after falling in the final four days on concerns about interest rates. Lowe's climbed 5 percent, while Sears jumped 11 percent to snap a four-week losing streak. McDonald's gained 7 percent as Deutsche Bank advised buying shares of the fast-food chain, saying its shares are cheap.
"We're going into a world that is going to recover," said Barton Biggs, who runs the New York-based hedge fund Traxis Partners. "The way to play it is stocks."
The S&P 500 rose 0.5 percent to 887, rebounding from the prior week's 5 percent retreat that was the steepest since March. The Dow Jones industrial average added 8.68 points, or 0.1 percent, to finish the week at 8277.32. The Nasdaq composite index added 0.7 percent to finish at 1692.01.
The advance in U.S. stocks was limited by concerns that the global economic slump will worsen after a report showed jobless claims rose more than economists' forecasts and S&P said Britain may lose its top credit rating. Yields on Treasury 10-year notes increased to a six-month high of 3.45 percent.
Investors including Pimco's Bill Gross said the United States will eventually lose its AAA credit rating. White House press secretary Robert Gibbs said Friday that he doesn't expect a downgrade.
The Treasury will auction $40 billion in two-year notes on Tuesday, $35 billion in five-year notes on Wednesday and $26 billion in seven-year notes on Thursday. The Treasury will also sell $61 billion in three-month and six-month bills on Tuesday.
-- Bloomberg News
