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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Stocks post best week since July

Sara Lepro Associated Press

NEW YORK – The stock market is keeping its momentum going, giving shares their best week in more than two months.

Moderate gains on Friday led by health care and utility companies pushed stocks to a 4 percent gain for the week, their best performance since July. The Dow Jones industrial average gained 78 points, reaching its highest level in a year.

Bond prices tumbled Friday, extending the previous day’s losses, as the Treasury market struggled to absorb $71 billion of new supply auctioned off this week in the government’s ongoing efforts to fund its stimulus programs.

The market’s performance was a fitting way to commemorate the second anniversary of the record highs set by the Dow and the Standard & Poor’s 500 index, which closed at 14,164.53 and 1,565.15 respectively. It was after reaching those milestones that the market began what turned into a cataclysmic slide that ended March 9.

This week investors cheered more signs that the economy is healing, including growth in service industries, a surprise profit from aluminum maker Alcoa Inc. and the first gain in retail sales in more than a year. That helped put a seven-month rally back on track after two down weeks driven by disappointing economic data.

The dollar recovered some of its recent losses against other currencies Friday after Federal Reserve Chairman Ben Bernanke reassured markets that the Fed will wind down its extraordinary stimulus measures when the time is right. Some investors interpreted Bernanke’s comments as a sign the Fed might raise interest rates sooner than expected.

The dollar is a double-edged sword for the stock market. The dollar would benefit from higher interest rates, but if the Fed tightens credit too soon it could choke off an economic recovery. On the other hand a continued fall in the dollar, which is more likely with lower interest rates, could trigger inflation.