Dow Posts Triple-Digit Gain
Updated August 24, 2012, 4:28 p.m. ET
Dow Posts Triple-Digit Gain
By CHRIS DIETERICH
NEW YORK—The Dow Jones Industrial Average banked its first triple-digit gain in three weeks on expectations that the Federal Reserve stands ready to bolster growth.
The Dow added 100.51 points, or 0.8%, to 13157.97, rising for the first time this week. Friday's gains erased much of Thursday's 115-point slide, reinvigorating a stalling rally that's driven the benchmark up almost 9% since early June. The Dow lost ground on the week, however dropping 87 points, or 0.7%, to snap a six-week string of weekly advances.
Concerns about poor economic data from around the globe sparked a fall in the Dow on Friday, with worries about Europe coming to the fore.
The Standard & Poor's 500-stock index rose 9.05 points, or 0.7%, to 141.13, and the Nasdaq Composite Index added 16.39 points, or 0.5%, to 3069.79.
Telecommunications, health-care and consumer-discretionary stocks were the S&P 500's best performers. Verizon Communications VZ +2.18%led the Dow with its 2.2% jump. Kraft Foods KFT +1.44%followed closely behind, gaining 1.4%.
Materials stocks tied to global growth, like Freeport-McMoRan Copper & Gold, FCX -1.74%which fell 1.7%, were the only ones in the S&P 500's 10 sectors to decline.
Stocks extended gains around midmorning after The Wall Street Journal reported that Federal Reserve Chairman Ben Bernanke defended actions the central bank has taken to support the economy in a letter to U.S. Rep. Darrell Issa (R., Calif.), chairman of the House oversight committee. Mr. Bernanke also said in the letter that there is room for more action on the part of the Fed to shore up growth.
"When that letter was released, it certainly did turn the market around," said John Canally, chief market strategist at LPL Financial. "Given that pickup, I'd say it was one of the prime movers."
Reports of the letter, dated Aug. 22, followed the release earlier this week of minutes from the most recent meeting of the Fed's policy-setting committee, which suggested increasing support within the central bank for more action.
Next week, Wall Street will focus on the economic-policy symposium hosted by the Federal Reserve Bank of Kansas City in Jackson Hole, Wyo. Mr. Bernanke is scheduled to speak there on Friday.
"With Bernanke set to speak, people are feeling QE-ish," said David Lutz, a managing director at Stifel Nicolaus in Baltimore, referring to the Fed's bond-buying program, called "quantitative easing."
The day's only major economic report was mixed. Orders for durable goods in July rose more than expected, amid a surge in demand for aircraft and autos. But after stripping out volatile transportation goods, orders fell, missing expectations.
In Europe, the Stoxx Europe 600 rose 0.1% Friday. Even so, the benchmark snapped an 11-week winning streak.
The Dow is riding a four-day losing skid. Worries about slowing global growth and that the Fed has run out of bullets to jumpstart the economy have been the main culprits for the recent decline. But now the magnitude of investor concern is rapidly ramping up. Steven Russolillo has details on The News Hub.
In corporate news, Watson Pharmaceuticals WPI +5.96%jumped after its subsidiary said it received final approval from the U.S. Food and Drug Administration for a generic equivalent of Endo Health Solutions' ENDP +0.91%Lidoderm pain-relief patch. Endo Health Solutions rose.
Shares of Eli Lilly LLY +3.44%gained after the drug maker said that although late-stage trials for its Alzheimer's treatment didn't meet primary goals, there was some statistically significant improvement in some patients, primarily in people with mild Alzheimer's disease.
In deal news, Black Hills BKH +7.77%shares jumped after a $243 million deal to sell North Dakota assets to QEP Resources, QEP +5.96%which surged.
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Autodesk ADSK -15.63%tumbled after the company, which makes design software, reported fiscal second-quarter results that fell short of expectations, provided a downbeat outlook for the third quarter and said it plans to reduce staff as part of cost-cutting efforts.
Aruba Networks ARUN +14.42%surged after the mobile network company reported fiscal fourth-quarter earnings and revenue that beat estimates, citing strong improvement in gross and operating margins.
Golf-equipment maker Callaway Golf ELY -6.60%dropped after announcing it will exchange nearly one million shares of convertible preferred stock into debt and common stock, which would dilute the shares outstanding.
Crude-oil futures fell 0.1% to settle at $96.15 a barrel, snapping a three-week winning streak. Gold added less than 0.1% to finish at $1,669.80 a troy ounce. The dollar gained against the euro and yen. The yield on 10-year Treasury bonds rose slightly to 1.678%, as demand fell. Benchmark 10-year yields broke a four-week streak of weekly gains.
Write to Chris Dieterich at chris.dieterich@dowjones.com
Dow Posts Triple-Digit Gain - WSJ.com
