Dow Jones average enjoys best week since July
NEW YORK – Stocks rose for the third straight day Friday, capping the best week for the Dow Jones industrial average since July.
The government said the economy grew at a 3.1 percent annual rate in the fourth quarter of 2010. That’s slightly better than economists expected and higher than the estimate made last month.
The Dow gained 362 points for the week, the most since a 512-point jump during the week ending July 9.
The S&P 500 rose 4.14, or 0.3 percent, to 1,313.80. The Nasdaq rose 6.64 points, or 0.2 percent, to 2,743.06.
All three stock indexes gained more than 2 percent for the week, helping them erase losses following the March 11 earthquake that hit Japan. The week started with a 178.01 point jump for the Dow after AT&T Inc. agreed to buy T-Mobile USA for $39 billion. That raised hopes for more buyouts. Better economic reports and stronger earnings followed, driving more gains.
There’s little incentive to shift money into the safest of investments, like bonds, said Jack Ablin, chief investment officer of Harris Private Bank in Chicago. The benchmark 10-year Treasury currently pays 3.4 percent a year. Even with a recent bout of turbulence, the Dow has gained 5.6 percent this year. “In the short-term, taking risk pays.”
The VIX, a measure of volatility for U.S. stocks, fell 27 percent over the week. That’s the biggest one-week drop since August 2007.
The dollar rose and Treasury prices fell after Charles Plosser, president of the Federal Reserve’s Philadelphia branch, said the stronger U.S. economy requires the central bank to begin planning ways to sell Treasury bonds and raise short-term interest rates in the “not-too-distant future.”
Two stocks rose for every one that fell on the New York Stock Exchange. Consolidated volume was 3.5 billion shares.
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