Saturday, Jun 23, 2018
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Stock Market

An early gain fades on Wall Street

Miners and materials companies rise

NEW YORK — An early rally on Wall Street fizzled, leaving the stock market slightly higher in midday trading today.

Miners and other companies that make basic materials surged after news that China’s trade rebounded in July, signaling the end of a six-month slowdown for the world’s second-largest economy.

A slump in telecommunications stocks held back the broader market. AT&T and Verizon each fell 1 percent. Dish Networks slid 2 percent after the company reported a surprise loss on Tuesday.

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Shortly after noon, the Standard & Poor’s 500 index was up six points, or 0.4 percent, at 1,697.

The Dow Jones industrial average rose 21 points, or 0.1 percent, to 15,492. In the first hour of trading, the Dow was up 86 points.

The Nasdaq composite gained 19 points, or 0.5 percent, to 3,672.

The major indexes have slid this week, and the S&P 500 has closed down for three days straight. The benchmark for most mutual funds has not had a four-day drop this year.

Brad McMillan, chief investment officer for Commonwealth Financial Network in Waltham, Mass., said a number of concerns have weighed on the market this week. Comments from Federal Reserve officials have convinced many investors that the bank will likely begin pulling back its support for the economy in the coming months.

At the same time, companies are warning of slower sales and turning in tepid second-quarter results. McMillan said it’s starting to look like corporate earnings haven’t kept up with the stock market’s strong pace this year.

“I think people are realizing that stock values are getting disconnected from earnings growth,” McMillan said. “For the rally to continue, people will have to pay more for earnings that aren’t growing that much.”

Mondelez International, the maker of Oreo cookies, turned in better quarterly results than Wall Street had expected late Wednesday. The company also announced plans to spend another $5 billion on buying its own stock. Mondelez International gained $1.40, or 4 percent, to $32.67.

Tesla Motors jumped 18 percent, following news that the maker of electric cars paid off a loan from the Department of Energy nine years early and blew past Wall Street’s estimates for its most recent quarter. Revenue soared thanks to stronger sales of its Model S. Tesla gained $24.09 to $158.18.

In economic news, the government reported that the average number of people who applied for unemployment benefits over the past four weeks dropped 6,250 to 335,500. That’s the lowest level since November 2007, a month before the Great Recession got underway.

Gradual but steady gains for the U.S. economy and corporate profits have lifted the stock market to record territory this year. The S&P 500 index closed at an all-time high of 1,709.67 on Friday and has surged 18.9 percent this year.

In other trading today, better economic news out of China, the world’s largest buyer of raw materials, shot commodity prices up. Copper, which is used in home construction and making electronics, surged 9 cents, or 3 percent, to $3.26 a pound.

The economic reports nudged U.S. government debt prices slightly higher and yields lower. The yield on the 10-year Treasury was trading at 2.58 percent, down from 2.60 percent late Wednesday.

Among other companies in the news:

— Groupon jumped $2.39, or 27 percent, to $11.11. Late Wednesday, the company reported slightly better second-quarter results than analysts expected and named its co-founder Eric Lefkofsky as CEO. Groupon also said it plans to buy $300 million of its own stock over the next two years.

— JPMorgan Chase lost 91 cents, or 2 percent, to $54.39, after the bank said it’s facing a criminal investigation tied to mortgage-backed bonds.

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