U.S. Equities Climb as Traders Cheer China Growth Efforts

Reuters

U.S. stocks rose Thursday as investors were heartened by signals from the Federal Reserve that it remains on a measured course to eventually raise interest rates.

The Dow Jones Industrial Average gained 51 points, or 0.3%, to 17208. The S&P 500 index rose five points, or 0.3%, to 2007 and the Nasdaq Composite Index added 17 points, or 0.4%, to 4579.

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The Fed said in its Wednesday statement that short-term interest rates would remain near zero for a "considerable time" after the end of its monthly bond purchases. Fed Chairwoman Janet Yellen declined to elaborate on how much time that meant.

For the year, the Dow has gained 3.5% and the S&P has risen 8.3% through Wednesday's close. Stock market gains in the last five years have been credited in part with the Fed's monetary policy, which has kept short-term interest rates near zero since December 2008. And the Fed's cautious approach to raising those rates should be positive for stocks, some investors say.

"It's a risk-on environment," said John Brady, managing director at futures brokerage R.J. O'Brien & Associates. That should last at least until the next employment report, which Fed officials examine closely for insight into the economic recovery. Until then, fund managers are likely to buy individual stocks that tend to outperform benchmark indexes, such as technology and biotech stocks, as they look to lock in gains going into the end of the year, he said.

On Thursday, investors parsed mixed economic reports. Jobless claims fell by 36,000 to 280,000 in the week ended Sep. 13, well below the 305,000 level of claims expected by economists surveyed by The Wall Street Journal. The decline in claims marked the biggest drop in nearly two years.

Meanwhile, U.S. home construction dropped sharply in August. Housing starts fell 14.4% from July to an annual rate of 956,000 units, missing expectations for a 5.5% decline. Building permits also logged a bigger-than-expected decline, falling 5.6% in August.

"The Fed cheered the market a little bit yesterday with keeping in the 'considerable time' language," said Karyn Cavanaugh, senior market strategist at Voya Investment Management.

In the bigger picture, Ms. Cavanaugh said the improving economy, which could translate into higher corporate profits, and accommodative monetary policy in other regions should continue to lift stocks.

"The biggest risk in the past five years has been not being in this bull market," she said.

The yield on the benchmark 10-year Treasury note rose to 2.627%, according to FactSet. Treasury yields move inversely with prices.

European markets eyed the ongoing referendum on Scottish independence, with results expected to be announced on Friday morning local time. The Stoxx Europe 600 index rose 0.9%.

Japanese stocks rose to an eight-month high as the dollar hit a six-year high against the yen, trading at Yen108.76.

In corporate news, Rite Aid Corp. reported better-than-expected earnings in the second quarter, but lowered its outlook for the full year. Shares fell 14%.

ConAgra Foods Inc. shares rose 2.1% after the food company's adjusted per-share earnings beat expectations.

In commodity markets, crude-oil futures fell 0.2% to $94.23 a barrel. Gold futures declined 1.2% to $1,221.60.