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Economy

Rally Moves DOW into Black for 2016

 

NEW YORK -A midday gain for stocks Thursday on the heels of a four-week rally has turned major indexes positive for the year, wiping out their losses from a terrible start to 2016. Materials and energy companies are rising as the price of gold and silver and oil jump. Drug company stocks continue to tumble, pulling health care companies lower.

KEEPING SCORE: The Dow Jones industrial average rose 202 points, or 1.2 percent, to 17,527 as of 2:21 p.m. Eastern time. The Standard & Poor’s 500 index gained 19 points, or 0.9 percent, to 2,046. Down 10 percent a little more than a month ago, the two indexes are higher for the first time all year a?? though only by small amounts. Nasdaq composite rose 22 points, or 0.5 percent, to 4,786. It’s still down 4.5 percent in 2016.

METALS SHINE: The price of gold jumped $35.20, or 2.9 percent, to $1,265 an ounce and silver climbed 81 cents, or 5.3 percent, to $16.03 an ounce. That was the biggest one-day gain for silver in more than a year. Copper rose 6 cents, or 2.6 percent, to $2.29 a pound. Gold is at its highest price in about a year, while silver and copper haven’t traded this high in about five months.

OIL: Benchmark U.S. crude gained $1.54, or 4 percent, to $40 a barrel in New York. U.S. crude is on track to close at its highest price since early December. Brent crude, the benchmark for international oils, rose $1.01, or 2.5 percent, to $41.34 a barrel in London. Oil prices are now higher than they were at the end of 2015, but they’re still far lower they have been for most of the last decade.

ON TIME: Package delivery company FedEx rose after it reported strong holiday-season sales, helped by continued growth in online shopping. FedEx also raised its projections for the year. The stock gained $15.65, or 10.8 percent, to $159.92.

FED FALLOUT: When the Federal Reserve decided Wednesday to leave interest rates unchanged, and suggested it will go slower in raising rates later this year, the dollar lost strength and commodity prices climbed. Commodities are priced in dollars, so a weaker dollar makes them more affordable in foreign markets and gives demand a boost. Investors also tend to buy gold when the dollar loses strength.

Mining company Newmont Mining added 48 cents, or 1.7 percent, to $28.03. Glass container maker Owens-Illinois rose $1.20, or 8 percent, to $16.18. Air Products and Chemicals, which sells gases for industrial, medical and other uses, gained $3.83, or 2.8 percent, to $139.89.

THE QUOTE: Over the last few years the dollar has gotten stronger and stronger compared to other currencies as investors waited for interest rates to rise. Over the same period, metals prices have weakened. Now that the Fed is saying it will raise rates more slowly, the dollar is slipping and metals prices are rising.

“When the dollar strengthens gold tends to sell off and vice versa,” said James Butterfield, head of research and investment strategy at ETF Securities.

He added that investors aren’t sure what monetary policy makers in Europe will do, and that kind of uncertainty usually sends metals prices higher.

LINGERING SYMPTOMS: Health care stocks continued to slump as Congress scrutinized drug pricing practices in a hearing of the Senate Committee on Aging. Investors are fearful that it will get harder for drug companies to raise their prices and boost their profits and revenues. Endo International, which is down more than 50 percent this year, lost $4.42, or 13 percent, to $29.49 and Eli Lilly gave up $3.45, or 4.8 percent, to $69.03. The Nasdaq biotech index has dropped 6 percent this week, and the broader S&P 500 health care index is down 3.5 percent.

BURNED: Williams-Sonoma lost $3.31, or 5.6 percent, to $56.15 after the seller of cookware and home furnishings disclosed disappointing fourth-quarter results and gave a disappointing outlook for 2016.

BROKEN CIRCUIT: Electronics manufacturer Jabil Circuit lost $2.22, or 10.1 percent, to $19.74 after it posted weaker-than-expected results in the fourth quarter and its guidance was also beneath expectations.

SEAWORLD CRUISES: SeaWorld Entertainment said it will immediately stop breeding orcas after years of controversy over keeping the whales in captivity. The move will phase the animals out of its theme parks. The stock gained $1.11, or 6.5 percent, to $18.23.

ART CLASS: Arts and crafts store operator Michaels Cos. jumped after its fourth-quarter profit and sales topped estimates. The stock advanced $2.41, or 9.9 percent, to $26.73.

NOT SO SWEET: Mondelez International fell 95 cents, or 2.3 percent, to $40.77 after Pershing Square, the hedge fund run by investor Bill Ackman, said it sold 20 million shares. Pershing Square remains a major shareholder in Mondelez, which makes products including Oreo cookies, Cadbury chocolates and Trident gum.

UNEMPLOYMENT BENEFITS RISE: The Labor Department reported that applications for unemployment benefits rose slightly last week, but they remain at levels consistent with a healthy job market.

BONDS, CURRENCIES: Bond prices have also risen, dampening their yields. The yield on the 10-year Treasury note slipped to 1.90 percent after it fell to 1.91 percent on Wednesday. The euro rose to $1.1323 from $1.1204. The dollar fell to 111.35 yen from 112.68 yen.

OVERSEAS: German’s DAX gave up 0.9 percent and the CAC-40 in France lost 0.5 percent. Britain’s FTSE 100 inched up 0.4 percent. Japan’s Nikkei 225 index closed 0.2 percent lower as the dollar fell. A weaker dollar would be bad news for Japanese exporters. Elsewhere, Hong Kong’s Hang Seng index climbed 1.2 percent. Shanghai’s composite index came back from early losses, gaining 1.2 percent. South Korea’s KOSPI added 0.7 percent.

MARLEY JAY, AP Markets Writer

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AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP. His work can be found at http://bigstory.ap.org/journalist/marley-jay

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