Updated 11:54 am, Wednesday, February 14, 2018
Photo: Mark Lennihan, AP
NEW YORK (AP) — U.S. stocks are shaking off an early decline and rising Wednesday as banks climb along with bond yields. The increase in rates came after the government said consumer prices climbed in January at a rate that was faster than economists had expected. There were few signs of the worries about inflation that sent stocks falling in the last few weeks, as technology, industrial and consumer-focused companies also rose.
KEEPING SCORE: The Standard & Poor’s 500 index rose 14 points, or 0.6 percent, to 2,677 as of 11:40 a.m. Eastern time. The Dow Jones industrial average added 44 points, or 0.2 percent, to 24,685. The Nasdaq composite climbed 75 points, or 1.1 percent, to 7,088. The Russell 2000 index of smaller-company stocks rose 13 points, or 0.9 percent, to 1,508.
PRICE REPORT: Excluding volatile items like food and energy, prices paid by consumers rose 0.3 percent in January. That’s the most in a year. Stocks started slumping Feb. 1 after reports of greater wage growth caused investors to worry about faster inflation. Inflation has been very low for years, and if that changes, it could prompt the Federal Reserve to raise interest rates more rapidly. Higher interest rates act as a check on the economy by making it more expensive for businesses and individuals to borrow money.
The reaction to the gains in consumer prices was relatively calm Wednesday. The yield on the 10-year Treasury note rose to 2.90 percent from 2.84 percent the day before. That hurt shares of high-dividend companies like real estate investment trusts and utilities. Those stocks are often compared to bonds because of their big dividend payments and relatively steady prices, but investors find them more appealing when bond yields are falling.
RETAIL SALES: American cut back on purchases of cars, furniture and a variety of other products in January, pushing retail sales down by 0.3 percent, the biggest decline in 11 months. The Commerce Department also cut its estimate for shopping in December, saying sales were unchanged. The surprise slowdown comes after a three-month stretch of sizzling consumer activity, from September through November, which had fueled the most robust holiday sales in a decade.
Still, retailers mostly traded higher. Amazon rose $23.99, or 1.7 percent, to $1,438.50 and Tiffany added $1.77, or 1.8 percent, to $102.73. Target gained $2.13, or 2.9 percent, to $76.01. Elsewhere Nike picked up $1.06, or 1.6 percent, to $66.93.
DOES HE GET EXTRA GUAC? Chipotle Mexican Grill soared after naming Taco Bell CEO Brian Niccol to lead the company. Chipotle has been hit hard by food safety scares over the last few years and has had trouble winning back customers. Niccol launched breakfast at Taco Bell and also introduced mobile ordering from its restaurants, and investors felt he might help the company improve its fortunes. Founder Steve Ells resigned as CEO in November.
The stock rose $35.41, or 14.1 percent, to $286.75. It traded above $700 in mid-2015.
SHOWTIME: Netflix climbed after the streaming video company said it signed another big-name TV writer and producer to a production deal. According to reports, “Glee” and “American Horror Story” producer Ryan Murphy received a $300 million deal that will span five years. He had worked with Twenty-First Century Fox. In August Netflix announced a deal with “Scandal” and “Gray’s Anatomy” creator and producer Shonda Rhimes.
Netflix climbed $10.43, or 4 percent, to $268.70.
WATCH THIS: After years of declines, watchmaker Fossil soared $5.47, or 60.5 percent, to $14.51 after it did far better than Wall Street expected in the fourth quarter. The stock was worth more than $100 at the end of 2014, but plunged as competition from smart watches and fitness trackers eroded its sales.
ENERGY: Benchmark U.S. crude also shook off an early loss and rose 15 cents to $59.34 a barrel in New York. Brent crude, used to price international oils, added 26 cents to $62.98 a barrel in London.
CURRENCIES: The dollar fell to 106.98 yen from 107.69 yen. The euro dipped to $1.2409 from $1.2355.
OVERSEAS: The DAX in Germany rose 1.3 percent and the French CAC 40 added 1.3 percent as well. The FTSE 100 in Britain picked up 0.7 percent. Japan’s benchmark Nikkei 225 slipped 0.4 percent after its economy grew at a slower-than-expected pace in the fourth quarter. South Korea’s Kospi gained 1.1 percent and Hong Kong’s Hang Seng rose 2.3 percent.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP . His work can be found at https://apnews.com/search/marley%20jayt .
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