August 24, 2013 in Business

Gain on Microsoft news lifts Dow

Steve Rothwell Associated Press
 

NEW YORK – A big jump in Microsoft helped lift the Dow Jones industrial average Friday.

Microsoft had its biggest gain in four years after CEO Steve Ballmer said he will retire. Ballmer took the helm of the software company from founder Bill Gates in 2000. The company has struggled to adapt as consumers switch from desktop computing to mobile devices

The giant software company is part of the 30-member Dow and its surge contributed more than a third of the index’s advance.

The Dow closed up 46.77 points, or 0.3 percent, at 15,010.51. The index closed down 0.5 percent for the week and is 3.2 percent lower for the month.

Stocks have sagged in August on concerns that the Federal Reserve will start to pull back on its economic stimulus. The Fed has been buying $85 billion in bonds every month to hold down long-term interest rates and encourage lending.

Minutes from the Fed’s July meeting released on Wednesday failed to give investors any clear indication of when the central bank will start slowing its bond purchases.

Some investors are using the summer slump as an opportunity to buy stocks at less expensive prices, said Joe Bell, a senior equity analyst at Schaeffer’s Investment Research. Stocks climbed to record highs at the start of the month.

Stocks are “getting more attention in the mainstream,” said Bell. “People are buying this pullback right now.”

A boom in housing has supported this year’s rally in stocks. Now, the drop in sales has traders worried that the U.S. housing recovery could falter because of higher mortgage rates.

Traders reacted to the drop in home sales by buying bonds and gold, investments that become more attractive when the economy appears weaker.

The yield on the 10-year Treasury note declined to 2.82 percent from 2.89 percent late Thursday. The price of gold rose $25, or 1.8 percent, to $1,395 an ounce, the highest in two months.

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