Stocks edge higher after 4 days of declines
NEW YORK — Better results from Best Buy and other retailers helped the stock market claw back from a four-day slide Tuesday.
Bond yields, which had been rising sharply for the last several days, pulled back, bringing relief to investors worried about higher interest rates.
The Dow Jones industrial average rose 52 points, or 0.4 percent, to 15,063 as of 11:45 a.m. Eastern Daylight Time. The Standard & Poor's 500 index rose 10 points, or 0.6 percent, to 1,656 and the Nasdaq composite added 27 points, or 0.8 percent, to 3,616.
The stock market is coming off a four-day slump, its first since December, as investors grew discouraged by poor corporate earnings and a sharp increase in interest rates. The Dow Jones industrial average lost 440 points over that period, and is down 4 percent since hitting an all-time high on Aug. 2.
At midday Tuesday, Best Buy and Urban Outfitters rose sharply, leading the retail sector higher.
Urban Outfitters jumped $4.05, or 10 percent, to $43.97, the biggest gain in the S&P 500. The Philadelphia-based teen retailer reported a 25 percent surge in second-quarter income as sales rose across nearly all its brands.
Best Buy rose $2.79, or 9 percent, to $33.50. The electronics retailer said it earned 32 cents per share in the last three months, much better than the 12 cents per share financial analysts expected. Most of the growth came from cutting costs and focusing on online sales.
The better news on retailers was a respite for investors, who have spent the last week and a half getting disappointing earnings and sales outlooks from some of the nation's largest store chains. Wal-Mart, Macy's, Kohl's and Saks all cut their sales forecasts, raising worries that the American consumer might be cutting back.
"The fact that some of these retailers were giving mixed signals was somewhat disconcerting," said Phil Orlando, chief equity market strategist with Federated Investors.
It wasn't all good news in the retail sector, however. Barnes & Noble plunged 16 percent after the bookseller's first-quarter loss more than doubled and the company's chairman called off his offer to buy the company's stores. Excluding one-time items, Barnes & Noble lost 86 cents per share, more than the 81 cents Wall Street analysts had expected.
In the bond market, the source of a lot of investor worries recently, yields declined modestly after nearly two weeks of increases. The yield on the benchmark U.S. 10-year Treasury note fell to 2.83 percent from 2.88 percent late Monday. It's still up sharply from its low of the year, 1.63 percent, reached in early May.
Bond yields are important because they are used to set interest rates on many kinds of loans, including mortgages. Investors have worried that a sharp rise in borrowing costs could disrupt the recovery in the U.S. economy.
The Federal Reserve has been buying $85 billion worth of bonds every month to keep interest rates low and encourage borrowing and hiring. Now that the economy appears to be on the mend, investors expect the Fed to cut back on its purchases as soon as its September policy meeting.
"We're not talking about the Fed pulling the plug on the economy here," Orlando said. "We're talking about the Fed looking to normalize bond yields because the economy is improving."
In commodities trading, the price of crude oil fell 74 cents, or 0.7 percent, to $106.11 a barrel. Gold rose $7.70, or 0.6 percent, to $1,373 an ounce.
The dollar fell slightly against the euro and the Japanese yen.
Among other stocks making big moves:
— TiVo rose 47 cents, or 5 percent, to $10.95 after the company announced a new line of digital video recorders to give television viewers more control over what they watch.
— Medtronic fell $1.44, or 3 percent, to $52.66 after the medical device maker's revenue fell shy of what Wall Street analysts were expecting. The stock has surged 29 percent this year and is trading at a five-year high.
— LightInTheBox plunged $6.88, or 36 percent, to $12.42. The newly public, China-based online retailer's sales forecast for the current quarter fell short of Wall Street's expectations. The company's initial public offering of stock in June priced shares at $9.50 each.