US stock market moves sharply higher

NEW YORK (AP) — Good news about hiring and retail sales helped send the U.S. stock market sharply higher Thursday.

For investors, the pair of government reports offered more encouragement that the U.S. economic recovery will continue, even as Europe and Japan struggle. The Standard & Poor’s 500 index was up 25 points, or 1.6 percent, to 1,637 as of 3:40 p.m.

The gains were broad. All 10 industry groups within the S&P 500 rose, led by retailers and other consumer-discretionary companies. Gannet soared 33 percent, the most in the S&P 500, on news that the newspaper publisher and TV station owner planned to buy another media company, Belo.

Markets have turned turbulent over the past three weeks. The S&P 500 climbed 17 percent from the start of the year and hit an all-time on May 21. The index began sliding the next day when the Federal Reserve said it would consider pulling back its support for the economy this year.

It’s been a bumpy ride lower. The index has been as high as 1,669 and as low as 1,608 over the past three weeks, a wide trading range of 3.6 percent.

Investors have been debating when the Fed will begin slowing its bond purchases, and they’ve been worrying about the results. They could get a better sense next Wednesday when the bank releases its policy statement and Fed Chairman Ben Bernanke holds another meeting with the media.

Some investors are worried that financial markets will falter when the Fed and other central banks pump less money into the system. Others are optimistic the U.S. economic recovery will pick up speed and push the stock market to new highs. They point to steady improvement in hiring and spending, which could help push corporate earnings higher.

“The underlying fundamentals of our economy are clearly doing much better,” McMillan said.

The latest positive news came early Thursday, when the government said the number of Americans seeking unemployment benefits fell to 334,000, below what economists had expected. Jim O’Sullivan, chief U.S. economist at High Frequency Economics, wrote in a note to clients that the government’s weekly numbers, while volatile, “continue to signal an improving labor market.”

The government also reported that U.S. retail sales increased 0.6 percent in May from April. That’s up from a 0.1 percent gain in April and the fastest pace since February.

Gannett jumped 33 percent, leading the S&P 500 index, after the newspaper publisher announcing a deal to buy Belo, another media company, for $1.5 billion. Gannett’s stock gained $6.81 to $26.66.

The Dow Jones industrial average rose 192 points, or 1.3 percent, to 15,189. The Nasdaq composite rose 48 points, or 1.5 percent, to 3,449.

Some investors, like Anton Bayer, CEO of Up Capital Management in Granite Bay, Calif., believe the market has already reached its high point for this year. The Fed has artificially propped up the economy, he thinks, which is why investors are nervous about what will happen when the central bank starts buying fewer bonds every month.

Bayer noted how the market has stumbled since Bernanke said the central bank could start pulling its stimulus as the economy gains strength. The Dow has lost about 300 points, or 2 percent, since May 21, the day before Bernanke gave his comments.

“What the markets are seeing is the economic engines are not being primed,” Bayer said. “The fear is of the stimulus going away and exposing an economy that is not really chugging along. It’s the big risk.”

In the U.S. government bond market, the yield on the 10-year Treasury note dropped to 2.13 percent from 2.23 percent late Wednesday.

The price of crude oil rose 13 cents to $96.01 a barrel in New York. Gold dropped $13.70 to $1,378.30 an ounce.

Among other stocks making big moves:

— Safeway jumped $1.82, or 8 percent, to $24.90 after the company said late Wednesday that it would sell its supermarket business in Canada to food retailer Sobeys for $5.7 billion.

— A fire at a Louisiana petrochemical plant owned by the Williams Companies sent the company’s stock down 35 cents, or 1 percent, to $33.65. The plant makes highly flammable gases, ethylene and propylene.


AP Business Writer Christina Rexrode contributed.

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