Sun, Mar 09, 2014 - Page 15 News List

US stocks surge in spite of Kiev crisis

‘UPBEAT FEELING’:Investors were cheered by the big improvement in the US jobs data and a better-than-expected increase in the index of manufacturing activity

AFP, NEW YORK

US stocks pushed higher again this week following a somewhat better set of economic data that helped offset rising tensions over Ukraine.

The gains were not the year’s most robust for a single week, but markets still finished in the black despite the occasional hiccup over Ukraine, where Russian forces have effectively taken control of Crimea, alarming the West.

“There’s still a pretty decent upbeat feeling,” BMO Global Asset Management market strategist Brent Schutte said.

The S&P 500 managed to close at record highs for three of the five days, finishing up 18.59 points (1 percent) to 1,878.04. The Dow Jones Industrial Average added 131.01 (0.8 percent) to 16,452.72, while the tech-rich NASDAQ Composite Index tacked on 28.1 (0.65 percent) to 4,336.22.

Highlights in economic news included Friday’s eagerly awaited US jobs report, which showed the economy added 175,000 jobs last month, a big improvement after the December and January reports disappointed.

Investors were also cheered by a better-than-expected rise in the Institute for Supply Management’s (ISM) index of manufacturing activity, while the US Federal Reserve’s beige book noted that the outlook in most of the country “remained optimistic” even as cold weather depressed economic activity.

On the downside, the ISM’s index for activity in the services sector showed the slowest growth in three years. Still, analysts attributed much of the weakness to the weather.

“We’re in a period where people are giving the economy the benefit of the doubt,” Meeschaert Capital Markets president Gregori Volokhine said.

US investors continue to watch the burgeoning political crisis between Russia and the West over Ukraine that included threats by Russia to annex Crimea and by Russian gas giant Gazprom to halt deliveries to Europe.

However, Europe is “much more vulnerable” than the US to negative consequences from the crisis, Volokhine said.

Schutte said Ukraine is “in the back of the mind” of US investors, but not a major fear at this point.

“It’s out there,” Schutte said. “It does weigh in some shape or form, but I don’t think it’s such a huge thing that it’s stopping people from investing.”

In corporate news, supermarket chains Safeway and Albertsons announced plans to merge in a US$9.1 billion deal that will create a giant with more than 2,400 stores and 250,000 employees.

The deal comes as supermarkets face competitive pressures from WalMart and other discount stores at one extreme and from Whole Foods Market and other upscale names at the other. The changes in the competitive landscape have made possible deals like Albertsons-Safeway that would have gotten much tougher antitrust scrutiny 10 or 15 years ago, analysts said.

The shakeup in retail also prompted dramatic action from RadioShack, which announced plans to shutter 1,100 stores, or one-fifth of its total. The 67-year-old electronics retailer has seen traffic plummet as new competitors have emerged and as online sales have become more important.

In a similar move, office-supplies retailer Staples said it would shut 225 stores in North America by the end of next year.

Oil companies were also in the news. ExxonMobil shares tumbled after the oil giant trimmed its oil and gas production forecast in the wake of several troubled project start-ups. However, rival Chevron got a boost when a US judge handed it a victory in a long-brewing lawsuit over pollution in Ecuador. The US ruling, which will be appealed, found a US$9.5 billion judgement by an Ecuadoran court in favor of indigenous Ecuadoran groups was the result of fraud.

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