Press Association
Saturday 11th February 2012
A rally in financial stocks has helped the market extend its grind higher to a third day.
The Standard & Poor's 500 index cleared an important hurdle, watched by traders, when it closed just above its January peak to set a new 17-month high. That could bring some hesitant buyers into the market.
Financial shares rose after Citigroup chief executive Vikram Pandit said the bank was on a path toward "sustained profitability" as it sells off risky assets. The bank has been the hardest hit by the financial crisis so the upbeat assessment helped boost expectations about the economy. The stock rose 5.6%.
The climb by financials helped offset concern about a spike in inflation in China. The country said its inflation rate rose to 2.7% in February from 1.5% in January.
A steep rise in prices could force China to raise interest rates. That, in turn, could slow one of the world's fastest-growing economies and put a damper on a global recovery.
Jim Dunigan, managing executive of investments at PNC Wealth Management, said he expected that China would be able to contain prices for now. He said: "We'll see hints of inflation here and there but I don't think we'll see that problem for a while."
In the US, the Labour Department said workers filing for jobless benefits for the first time fell by 6,000 to 462,000 last week. Economists were predicting a slightly bigger drop, according to Thomson Reuters. The report showed some easing in the labour market, but it did not point to the increase in hiring that investors want to see.
Stocks have traded in a narrow range since the Labour Department said on Friday that employers cut fewer jobs in February than analysts expected. The market is looking for more signs of progress. The week's quiet trading comes as investors look for more signs about the direction of the economy.
The Dow Jones industrial average rose 44.51, or 0.4%, to 10,611.84. It is down 1.1 % from its recent high in January 19.
The S&P 500 index advanced 4.63, or 0.4%, to 1,150.24, above its January 19 close of 1,150.23. The index now stands at its highest level since October 1, 2008. The Nasdaq composite index rose 9.51, or 0.4%, to 2,368.46 for its sixth straight advance.
