Bond yields climbed on Wednesday and U.S. stock indexes continued their march to record highs after more reports showed the economy continues to strengthen. The encouraging data could push the Federal Reserve to raise interest rates sooner rather than later in its gradual move away from the record-low rates of the Great Recession.
KEEPING SCORE: The Standard & Poor’s 500 index rose 5 points, or 0.2 percent, to 2,343 as of 11:23 a.m. Eastern time. If it holds the gain, it would be the seventh straight for the index and mark its longest winning streak in nearly three-and-a-half years.
The Dow Jones industrial average rose 89 points, or 0.4 percent, to 20,594. The Nasdaq composite rose 17, or 0.3 percent, to 5,780. The market was nearly evenly split between rising and falling stocks.
ENCOURAGING ECONOMIC GAINS: Wednesday’s economic reports give the Federal Reserve more encouragement to raise interest rates, and economists said the possibility is increasing that it may happen at the central bank’s next meeting in March. Retailers had stronger sales in January than economists expected, and inflation at the consumer level was the highest in years. Consumer prices rose 2.5 percent in January from a year earlier, the highest rate since March 2012.
Fed Chair Janet Yellen said in testimony before a Senate committee on Tuesday that the strengthening job market and a modest move higher in inflation should warrant continued, gradual increases in interest rates. The central bank raised rates in December for just the second time in a decade, after keeping rates at nearly zero to help lift the economy out of the Great Recession. Yellen speaks before a House committee Wednesday.
BOND YIELDS: Treasury yields jumped immediately after the release of the retail sales and inflation reports. The 10-year yield rose to 2.49 percent from 2.47 percent late Tuesday. The 30-year yield rose to 3.09 percent from 3.06 percent.
DAMPENED DIVIDEND DEMAND: When bonds are paying more in interest, it can mean less demand from income investors for stocks that pay big dividends. Utility stocks, which are some of the biggest dividend payers, fell 1 percent, the largest loss among the 11 sectors that make up the S&P 500. Real-estate investment trusts, which are also go-to buys for dividend seekers, were weak as well.
BANKING ON GAINS: Financial stocks had some of the biggest gains, and those in the S&P 500 rose 0.7 percent. Banks can benefit from higher interest rates by charging more for loans. Bank of America rose 59 cents, or 2.4 percent to $24.65.
POPPING: Procter & Gamble rose $2.61, or 3 percent, to $90.47 after activist investor Nelson Peltz’s Trian Fund Management disclosed in a regulatory filing that it owns a stake in the company.
ALIGHTING: Airline stocks rose after Warren Buffett’s Berkshire Hathaway disclosed that it added to its investments in several of them.
Southwest Airlines rose $2.28, or 4.1 percent, to $57.59, Delta Air Lines rose $1.89, or 3.8 percent, to $51.75, United Continental rose $2.32, or 3.1 percent, to $76.06 and American Airlines rose $1.38, or 3 percent, to $47.95.
SINKING: American International Group sank to the biggest loss in the S&P 500 after reporting a larger operating loss for the fourth quarter than analysts expected. It fell $5.74, or 8.6 percent, to $61.15.
PETRIFIED: Fossil Group plunged $3.73, or 16.3 percent, to $19.14. The watch and accessories company gave a profit forecast for 2017 that fell well short of analysts’ predictions, and it said it may lose money.
GLOBAL MARKETS: In Europe, the German DAX index rose 0.2 percent, while the French CAC 40 rose 0.7 percent and the U.K.’s FTSE 100 added 0.5 percent. In Asia, Japan’s Nikkei 225 index rose 1 percent, Hong Kong’s Hang Seng rose 1.2 percent and the Kospi in South Korea gained 0.4 percent.
CURRENCIES: The strong U.S. economic reports helped lift the value of the dollar against many of its rivals. The dollar ticked up to 114.37 Japanese yen from 114.22 yen late Tuesday. The euro fell to $1.0557 from $1.0572, and the British pound dipped to $1.2458 from $1.2465.
COMMODITIES: Benchmark U.S. crude fell 19 cents to $53 a barrel. Brent crude, the international standard, fell 11 cents to $55.86 a barrel in London. Natural gas rose 5 cents to $2.96 per 1,000 cubic feet.
Gold rose $3.10 to $1,228.50 per ounce, silver rose 4 cents to $17.93 per ounce and copper was flat at $2.74 per pound.
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