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Stocks edge higher as retailers rally
NEW YORK—Stocks edged higher on Wall Street after a rally in retail stocks offset concerns about flaring tensions in Washington over increasing the country’s borrowing limit. The Dow Jones industrial average ended the day up 27.57 points, or 0.2 per cent, at 13,534.89. The Dow moved higher in the late afternoon after being down as much as 62 points in the early going.
The Standard and Poor’s 500 rose 1.66 points to 1,472.34, a five-year high. The Nasdaq composite index, dragged down by a fall in Apple, fell 6.72 points to 3,110.78. Retail stocks moved higher throughout the day, boosted by a report that showed retail sales increased in December, helping the major indexes reverse early losses.
Consumers bought more autos, furniture and clothing, despite worries about potential tax increases, the Commerce Department said yesterday. Sales rose 0.5 per cent in December from November, slightly better than November’s 0.4 per cent increase and the best showing since September. JC Penney rose 62 cents, or 3.4 per cent, to US$18.71. Dollar General gained US$1.62, or 3.8 per cent, to US$44.64. Ford advanced 31 cents, or 2.2 per cent, to US$14.30.
Treasury Secretary Timothy Geithner told congressional leaders in a letter late Monday that the US government will reach its borrowing limit as soon as mid-February, earlier than expected. Federal Reserve Chairman Ben Bernanke also commented on the issue Monday, saying it was one of the “critical fiscal watersheds” for the government in coming weeks.
President Barack Obama has criticized congressional Republicans for linking talks over raising the debt ceiling to ongoing budget negotiations. Obama said the consequences of the US government defaulting on its debt would be disastrous and shouldn’t be used as a bargaining chip to extract concessions on spending cuts.
Markets were roiled in the summer of 2011 as lawmakers haggled over an increase to the debt limit. The dispute cost the US its AAA ranking from the credit-rating firm Standard and Poor’s.
The US fiscal crisis is still the biggest single individual risk facing investors, with 37 per cent of investors naming it as the biggest worry, according to a survey of fund managers published by Bank of America Merrill Lynch Tuesday. The European debt crisis was cited as the biggest concern by 23 per cent of those polled and a “hard landing” for the Chinese economy was third on the list with 12 per cent.
Apple fell US$15.83, or 3.2 per cent, to US$485.92, closing below US$500 for the first time in almost a year. Apple slumped 3.6 per cent Monday on concern that demand for its iPhone 5 is slowing. Nomura analysts today lowered their target price for the stock to US$530 from US$660 and cut their estimates for iPhone sales this year.
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