S&P 500 closes above 1,700 points for first time
NEW YORK (AP) — Stocks roared back to record highs on Thursday, driven by good news on the economy.
The Standard & Poor’s 500, the Dow Jones industrial average and the Russell 2000 index set all-time highs. The S&P broke through 1,700 points for the first time. The Nasdaq hit its highest level since September 2000.
The gains were driven by a steady flow of encouraging reports on the global economy.
Overnight, a positive read on China’s manufacturing helped shore up Asian markets. An hour before U.S. trading started, the government reported that the number of people applying for unemployment benefits last week fell sharply. At mid-morning, a trade group said U.S. factories revved up production last month. And while corporate earnings news after the market closed Wednesday and throughout Thursday brought both winners and losers, investors were able to find enough reports that they liked, including those from CBS, MetLife and Yelp.
“It’s just a lot of things adding up,” said Russell Croft, portfolio manager of the Croft Value Fund in Baltimore. “It’s hard to put your finger on why exactly, but basically it’s a bunch of pretty good data points coming together to make a very good day.”
Overall, analysts said, the news was good but not overwhelmingly so. Enough to suggest that the economy is improving, but not enough to prompt the Federal Reserve to withdraw its economic stimulus programs.
Earnings results covered a wide range. Boston Beer, which makes Samuel Adams, and home shopping network operator HSN rose after beating analysts’ estimates for earnings and revenue. Kellogg, health insurer Cigna and cosmetics maker Avon were down after beating earnings predictions but missing on revenue.
It’s becoming a familiar template this year. Stock indexes have been setting record highs since April even while the underlying economy is often described as improving, but hardly going gangbusters.
While layoffs are steadily declining, companies aren’t hiring as quickly as they did before the financial crisis and Great Recession. The economy is growing, but not fast enough to drive significant job growth. The Commerce Department reported this week that gross domestic product, or GDP, the broadest measure of the economy, grew at a tepid annual rate of 1.7 percent in the second quarter.
“They’re not great numbers, but they’re positive and they’re continuing to grow,” said Tim Courtney, chief investment officer of Exencial Wealth Advisors in Oklahoma City. “That’s about all the market needs to hear.”
Because the stock market often looks ahead 6-9 months, it’s not unusual for stock indexes to be ahead of economic indicators, when the economy is improving or worsening. Right now, stock investors may be anticipating a stronger economy and better earnings next year.
Among Thursday’s stock index records: The S&P 500 index rose 21.14 points, or 1.3 percent, to 1,706.87. The Dow rose 128.48 points, or 0.8 percent, to 15,628.02. The Russell 2000 index of small-company stocks rose 14.62 points, or 1.4 percent, to 1,059.88.
The S&P is now up 19.7 percent for the year, the Dow 19.3 percent and the Russell 24.8 percent.
The Nasdaq composite index rose 49.37 points, or 1.4 percent, to 3,675.74, in line with the daily gains of other indexes but still far short of its record. The Nasdaq, which is heavily weighted with technology stocks, briefly veered above 5,000 points in March 2000, just before the Internet bubble burst.
Investors said Thursday that the S&P’s crossing over 1,700 points might give consumers a psychological boost, but they were hardly crowing about a new era in stocks. Turns out it’s quite common for indexes to hit records. Since 1950, the S&P has hit a high about 7 percent of the time, or an average of about every 15 days, Courtney said. The S&P’s last record close was just eight trading days earlier, on July 22.
The S&P made the jump from 1,600 to 1,700 in less than three months. The index first traded above 1,600 on May 3. The first close above 1,500 was in March 2000.
The market’s sharp advance Thursday was a stark contrast with the previous two days, when the S&P 500 moved less than a point each day. On Tuesday, investors didn’t want to make big moves ahead of the Federal Reserve’s policy announcement the next day. On Wednesday, the Fed didn’t make much news after all. The central bank said, unsurprisingly, that the U.S. economy was recovering but still needed help. The Fed didn’t give any indication of when it might cut back on its bond-buying program, which has been supporting financial markets and keeping borrowing costs ultra-low.
Among the good economic and corporate news that cheered investors Thursday:
— China’s purchasing managers’ index — a gauge of business sentiment — rose to 50.3 in July from 50.1 in June. Analysts had expected a modest decline below 50.
— The Labor Department said that the number of Americans applying for unemployment benefits fell 19,000 to 326,000. That was the fewest since January 2008, one month after the Great Recession started in December 2007.
— The Institute for Supply Management, a trade group of purchasing managers, said its index of manufacturing jumped to 55.4 in July, up from 50.9 in June and well above an expected reading of 51.8. A number above 50 indicates growth.
— Auto companies reported strong sales gains for July. Ford, Chrysler and Nissan each reported U.S. sales growth of 11 percent compared with the same month a year ago.
An index of transportation stocks also rose sharply. Many investors see that sector as a leading indicator for the economy because freight and shipping companies tend to get busier as the economy improves.
The Dow Jones Transportation average jumped 208.26 points, or 3.2 percent, to 6,670.06, led by a surge in Con-way, a Michigan-based freight company that reported earnings Thursday that were far higher than investors expected. Con-way rose $4.34, or 10.5 percent, to $45.79.
The price of crude oil rose $2.86, or 2.7 percent, to $107.89 a barrel. Gold slipped $1.80 to $1,311.20 an ounce. The dollar rose against the euro and the Japanese yen.
The yield on the 10-year Treasury note rose sharply, to 2.72 percent from 2.58 percent late Wednesday. That means investors were selling U.S. government debt securities, possibly over fears that rates will go higher as the economy strengthens and they’ll lose more money. When yields rise, the value of bonds falls.
Among stocks making big moves:
—Sprouts Farmers Markets more than doubled on the company’s first day of trading, jumping $22.11 to $40.11 — another sign that investors are becoming more comfortable taking on risk.
—Yelp soared $9.70, or 23.2 percent, to $51.50. The consumer review website continued to lose money in its latest quarter, but it sold more ads and drew more visitors.
—Exxon Mobil fell $1.02, or 1.1 percent, to $92.73, after reporting lower earnings as oil and gas production slipped. Profit margins on refining oil also fell.
Ohio man who enslaved 3 women gets life in prison
CLEVELAND (AP) — Standing before the man who enslaved and raped her for a decade, Michelle Knight described how the world had changed in the three months since they last saw each other: The captive, she said, was now free and the oppressor would be locked away forever to “die a little every day.”
Ariel Castro’s fate had been determined long before he was sentenced Thursday to life in prison plus 1,000 years. But Knight’s words in a crowded courtroom put a final seal on the kidnapping case that horrified the nation and subjected three young women to years of torment in Castro’s ramshackle house.
“You took 11 years of my life away and I have got it back,” Knight said. “I spent 11 years in hell. Now your hell is just beginning.”
A short time later, the 53-year-old former school bus driver apologized to his victims briefly in a rambling, defiant statement. He repeatedly blamed his sex addiction, his former wife and others while claiming most of the sex was consensual and that the women were never tortured.
“These people are trying to paint me as a monster,” he said. “I’m not a monster. I’m sick.”
The sentence was a foregone conclusion after Castro pleaded guilty last week to 937 counts, including aggravated murder, kidnapping, rape and assault. A deal struck with prosecutors spared him from a possible death sentence for beating and starving Knight until she miscarried.
During her statement, Knight was just a few feet from Castro, seeing him for the first time since her rescue in May from the house that Castro turned into a prison with a makeshift alarm system and heavy wooden doors covering the windows.
“I will live on,” she said. “You will die a little every day.”
The three women disappeared separately between 2002 and 2004, when they were 14, 16 and 20 years old. Each had accepted a ride from Castro. They escaped May 6 when Amanda Berry, now 27, broke part of a door to Castro’s house in a tough Cleveland neighborhood and yelled for help. Castro was arrested that evening.
The escape electrified Cleveland, where photos of the missing women still hung on utility posts. Elation turn to despair as details of their ordeal emerged.
Prosecutors on Thursday detailed Castro’s repeated sexual assaults, how he chained the women and denied them food or fresh air.
They displayed photos that gave a first glimpse inside the rooms where the women lived. Stuffed animals lined the bed and crayon drawings were taped to the wall where Berry lived with her young daughter who was fathered by Castro. One of the drawings on a shelf said “Happy Birthday.”
But in the same room, the window was boarded shut and door knobs had been removed and replaced with multiple locks.
Another room shared by Knight and Gina DeJesus had a portable toilet and a clock radio and several chains.
Prosecutors said the women were chained to a pole in the basement and a bedroom heater. One woman had a motorcycle helmet placed on her head while in the basement. Later, when she tried to escape, she had a vacuum cleaner cord wrapped around her neck.
FBI agent Andrew Burke said Castro would occasionally pay his victims after raping them. Then he would require them to pay him if they wanted something special from the store.
A letter written by Castro was found in the home days after his arrest and shown in court. It was titled “Confession and Details.” He also wrote “I am a sexual predator.”
Cuyahoga County prosecutor Tim McGinty said in a court filing that one of the women kept a diary.
“The entries speak of forced sexual conduct, of being locked in a dark room, of anticipating the next session of abuse, of the dreams of someday escaping and being reunited with family, of being chained to a wall, of being held like a prisoner of war … of being treated like an animal,” the filing said.
Knight, 32, was the first woman abducted after Castro lured her into his house with the promise of a puppy for her son. She said she cried every night and that her years in captivity “turned into eternity.”
“He tormented me constantly, especially on holidays,” Knight said. “Christmas was the most traumatic day because I didn’t get to spend it with my son.”
She sat quietly as Castro claimed the women lived a happy life with him.
“We had a lot of harmony that went on in that home,” he said.
Castro called his daughter with Berry a “miracle child” and argued with the judge that he didn’t commit a violent crime.
He pointed out that the FBI was once close to him when agents talked with his daughter, who was walking home with DeJesus on the day she disappeared.
“The FBI let these girls down when they questioned my daughter,” he said. “They failed to question me.”
He also said he was never abusive until he met his former wife, who is now dead.
Once Castro finished, Judge Michael Russo thanked Knight for showing “remarkable restraint” during his statement. The judge then dismissed Castro’s claims that the women lived a happy life with him.
“I’m not sure there’s anyone in America that would agree with you,” he said.
None of Castro’s relatives were in the courtroom. Berry and DeJesus also stayed away. Instead, their family members read statements on their behalf.
“We stand before you and promise you that our beloved family member thrives,” said Sylvia Colon, DeJesus’ cousin. “She laughs, swims, dances, and more importantly, she loves and is loved. We are comforted in knowing that she will continue to flourish.”
The women have begun emerging from the privacy they had sought after they escaped to freedom.
Berry made a surprise onstage appearance at a rap concert last weekend, and DeJesus made a few televised comments as a privacy fence was being erected around her house.
Gay couples get hitched in Minnesota, Rhode Island
PROVIDENCE, R.I. (AP) — In public celebrations and intimate ceremonies, gay couples exchanged vows Thursday in Minnesota and Rhode Island as the number of places where same-sex couples can wed grew to more than a quarter of U.S. states.
Dozens of gay couples began getting hitched at the stroke of midnight in Minnesota, the largest Midwestern state where it is now legal to do so. In Rhode Island, the last New England state to allow same-sex marriage, weddings began at 8:30 a.m., when municipal offices opened.
Zachary Marcus and Gary McDowell were married Thursday afternoon at Providence City Hall by Mayor Angel Taveras. McDowell, 28, a Harvard Medical School researcher, was born in Northern Ireland. The recent Supreme Court decision striking down a law denying federal benefits to married gay couples means he can petition for permanent residency.
“It was important for us that it be the first day,” said Marcus, 25, a Brown University medical student. “It’s a personal day for us, and it’s also a great political victory.”
As of Thursday, same-sex couples can marry in 13 states and in Washington, D.C. The national gay rights group Freedom to Marry estimates that 30 percent of the U.S. population now lives in places where gay marriage is legal.
In Minneapolis, an estimated 1,000 people packed into City Hall at midnight to celebrate 46 same-sex weddings officiated by Mayor R.T. Rybak. Several Hennepin County judges performed 21 more in the City Council’s chambers.
“I didn’t expect to cry quite that hard,” said a beaming Cathy ten Broeke, who with Margaret Miles was the first gay couple to wed at City Hall.
“We do,” the couple and their 5-year-old son, Louie, said to cheers as they promised to be a family.
Gov. Mark Dayton had proclaimed Aug. 1 to be “Freedom to Marry Day” in Minnesota. Celebrations in Rhode Island were more muted, which advocates said was probably because so many nearby states already allow same-sex marriage.
Democratic Gov. Lincoln Chafee, who became one of the earliest prominent national supporters of legalizing gay marriage when he was a Republican U.S. senator, planned to attend a state lawmaker’s wedding later in the day. House Speaker Gordon Fox, who is gay, planned to officiate. U.S. Rep. David Cicilline, one of the few openly gay members of Congress, stayed in Washington for the legislative session but issued a statement expressing support.
A Washington, D.C.-based group opposed to gay marriage, Alliance Defending Freedom, advised municipal clerks they could ask a colleague to issue licenses to same-sex couples if they were opposed. There were no reports of that happening in either state.
In some communities, excited clerks posed for photos with couples. Newport, R.I., City Clerk Kathleen Silvia gave kisses to Federico Santi and John Gacher, who have been together for 41 years and converted their civil union to a marriage Thursday morning. She called it “a day of smooching.”
In Minnesota, budget officials estimated that 5,000 gay couples would marry in the first year. Voters there rejected a constitutional ban on gay marriage last fall, and the Legislature this spring moved to make it legal.
Lawmakers in heavily Catholic Rhode Island passed the marriage law this spring after more than 16 years of efforts by same-sex marriage supporters.
Obama orders review of chemical plant rules
WASHINGTON (AP) — President Barack Obama on Thursday ordered federal agencies to review safety rules at chemical facilities in response to the deadly April explosion at a Texas fertilizer plant.
In an executive order, Obama tasked agencies with identifying new ways to safely store and secure ammonium nitrate, the explosive chemical investigators say caused the blast. Agencies are also being told to determine whether additional chemicals should be covered by federal regulatory programs.
The massive explosion at the plant in the community of West, Texas, killed 15 people, leveled hundreds of structures and damaged three of the town’s four schools. It also prompted new scrutiny of regulations at chemical plants and the risks posed by deadly chemicals to people living in surrounding areas.
While the explosion is still being investigated, preliminary findings have been presented to Congress. A report sent to the Senate Environment and Public Works Committee in June showed that the decades-old standards used to regulate fertilizer chemicals are far weaker than those used in other countries.
The report concluded that the safety of ammonium nitrate fertilizer storage “falls under a patchwork of U.S. regulatory standards and guidance — a patchwork that has many large holes.”
The Environmental Protection Agency, for example, does not regulate the chemical. The Occupational Safety and Health Administration requires that ammonium nitrate be stored separately from other combustibles in a room that has a partition that can withstand fire for up to an hour. But the agency had not inspected the West plant since 1985.
Democratic Sen. Barbara Boxer of California, chairwoman of the Senate committee, said she discussed the problem with Obama last week and was gratified he took the executive action.
“As I told the president, the EPA has not updated its alert since 1997, and the best practices recommended by other federal agencies such as OSHA are not being uniformly followed,” she said in a statement.
Some agencies do have rules on ammonium nitrate, but none apparently applied to the facility in West.
With the investigation continuing, the White House said it wanted to move forward where it could to address chemical safety concerns. Obama’s executive order also calls for improved coordination among state and local agencies that deal with chemical plants. And it tasks the federal government with modernizing its information sharing about the plants.
Auto sales rise as small cars enjoy summer surge
DETROIT (AP) — Pickup trucks may have led the charge, but strong sales of small cars in July showed demand for new vehicles is broad — and not slowing down.
Car sales grew in the first six months of this year, but not at the blistering pace of trucks and SUVs. Through June, full-size pickups were up 22.5 percent over the year before, while cars were up just 5 percent.
Last month, car sales took off. General Motors’ car sales jumped 24 percent. Sales of the Honda Civic small car were up 30 percent to 32,416, their best July in 13 years. Sales of the recently redesigned Ford Fiesta subcompact jumped 89 percent, while the Toyota Prius hybrid was up 40 percent.
Part of the small car surge was seasonal. Small cars always sell better in the summer and then taper off as winter approaches. But it’s also an indication of the high level of demand from regular consumers, not just the contractors and other small businesses that helped fuel the truck boom.
Christian Mayes, an auto analyst with Edward Jones in St. Louis, said truck sales will pick up even more in the fall. But he also expects car sales to remain strong through the rest of this year because short-term interest rates should stay low, keeping payments down. Also, automakers are introducing new cars at a brisk pace, and car buyers are finally replacing the old vehicles they kept through the Great Recession.
“A lot of customers with their cars being 10 years old or older are looking to trade in and get something a little bit newer,” he said.
GM, Ford, Chrysler, Toyota and Nissan all reported double-digit sales gains last month. Honda led the way with a 21 percent sales increase. Of major automakers, only Volkswagen had a down month. Its sales were off 3.3 percent as the top-selling Jetta compact faltered.
Industry sales rose 14 percent over last July to 1.3 million, according to Autodata Corp. On an annualized basis, the sales pace slowed slightly from June to 15.7 million. But that was still better than the annualized rate of 14 million from a year ago.
The industry’s numbers for July come a day after the U.S. government reported stronger than expected growth for the April-June quarter. The consulting firm LMC Automotive said the improving economy could push this year’s sales to around 16 million.
Sales last topped 16 million in 2007, just ahead of the recession. They bottomed out at a 30-year low of 10.4 million in 2009, and have been recovering ever since.
Appealing new products should keep drawing buyers to dealer showrooms. GM’s new Chevrolet Silverado and GMC Sierra pickups just went on sale, while Toyota said Thursday that production of its new Corolla small car has begun in Mississippi.
Incentives such as rebates and low-interest loans are also helping sales. Car pricing site Edmunds.com said incentives were up 10 percent in July over the same month last year, to an average of $2,463 per vehicle.
Toyota had the biggest increase, with spending up 20 percent to an average of $1, 945, Edmunds said. Edmunds senior analyst Jessica Caldwell said Camry incentives are at their highest level in two years as the sedan competes with newer rivals like the Nissan Altima.
Overall, though, the discounts haven’t reduced prices. The average sale price of a vehicle last month held steady at just over $31,000, according to the car buying site TrueCar.com. That’s because buyers are loading up on options like leather seats and navigation systems.
For example, 32 percent of GMC Acadia buyers get the top-tier Denali trim level, which starts $11,900 above the base model and includes a rear seat entertainment system and a leather-wrapped mahogany steering wheel. The most popular color for the Buick Enclave is white diamond tricoat, a premium paint that costs $995 more.
To get lower monthly payments when the price is higher, buyers are stretching out their loans and leasing more vehicles, according to LMC. Thirty percent of car loans now are six years or longer, up from 29 percent in the first half of last year. Leasing, which generally lowers monthly payments, accounts for 24 percent of auto sales, up from 21 percent a year ago, LMC said.
Tim Tremonte, 22, of Somerville, Mass., recently got a three-year lease on a new Nissan Sentra that’s loaded with options. Tremonte, who works for a Jeep dealership, added navigation, a backup camera and a sunroof because those features increase the car’s residual value. Higher residuals help lower monthly lease payments. Tremonte put $300 down and now pays $250 per month for the car.
Here are more details from individual automakers:
— GM said its July U.S. sales rose 16 percent to 234,071. Sales of the Chevrolet Silverado and GMC Sierra pickups combined rose 46 percent. Roughly 15 percent of the trucks sold were the new versions, which went on sale in June. Sales of the Cruze small car jumped 70 percent.
— Ford sold 193,715 vehicles. Ford’s 11-percent increase was led by the F-Series pickup, with sales up 23 percent. Ford Fusion sedan sales dropped 12 percent as the company struggled to meet demand with its current production capacity. But Ford said more Fusions will be available this fall after it adds a shift to a Michigan plant.
— Toyota’s sales rose 17 percent to 193,394. The Prius hybrid jumped 40 percent while the midsize Camry rose 16 percent to 34,780 and remained the country’s best-selling car. Lexus sales were up 38 percent on the strength of the new IS sedan.
— Honda’s sales jumped 21 percent to 141,439. The CR-V and Pilot SUVs both saw 32.5 percent gains.
— Chrysler’s sales rose 11 percent to 140,102. Ram pickup sales rose 31 percent over a year ago, buoyed by the improving housing market. Jeep Grand Cherokee sales rose 30 percent, the SUV’s best July since 2005.
— Nissan’s sales rose 11 percent to 109,041, a July record for the company. Sales of the Altima midsize car rose 11 percent, and sales of the redesigned Pathfinder SUV more than tripled.
— Hyundai’s sales rose 6 percent to 66,005 on strong sales of the Santa Fe SUV and Elantra small car.
— Subaru’s sales rose 43 percent to 35,994, with Forester sales up 52 percent.