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8B Daily News – Tuesday, June 4, 2013 Why bad news makes the stock market happy NEW YORK (AP) — For now, bad news is good for the stock market. Investors judged that the latest weak economic reports will make it more likely that the Federal Reserve will continue to stimulate the economy and support a rally on Wall Street. On Monday, a measure of U.S. manufacturing fell in May to its lowest level since June 2009 as overseas economies slumped and weak busi- Wall Street ness spending reduced new orders to factories. That helped convince investors that the Fed will hold off from slowing down its $85 billion bond-buying program. Speculation that the central bank was set to ease that stimulus, a major support for this year's rally in stocks, has caused trading to become volatile in the last two weeks. The Standard & Poor's 500 index fell in the morning after the manufacturing report was published at 10 a.m. It moved between gains and losses for much of the day, then climbed decisively in the last hour of trading. The ''good news is bad news'' interpretation of economic reports may support stocks in the short term, but at the end of the day the economy has to keep improving for stocks to reach new highs, said Alec Young, a Through the Newspapers in Education program, area classrooms receive the Red Bluff Daily News every day thanks to the generosity of these local businesses & individuals. TEHAMA COUNTY DAILY NEWS RED BLUFF 885 NTY S I N C E 1 TEHAMA COU E VOICE OF THANK YOU FOR SUPPORTING NEWSPAPERS • MODERN CLEANERS • DR. ASATO & MARTIN • WARNER ELECTRIC • RED BLUFF AUTO DISMANTLING • OLIVE CITY QUICK LUBE • WALMART • CORNING AUTO CENTER • NORTH MAIN AUTOMOTIVE • TEHAMA CO. DEPT. OF ED. • FIDELITY NATIONAL TITLE CO. • JOHN WHEELER LOGGING, INC. • TRIPLE R GAS • RED BLUFF VISION CENTER • DUDLEY'S EXCAVATING, INC. • HINKLE ROOFING & CONST. • RED BLUFF HEALTH CARE • TEHAMA ESTATES • BRETNEY SUTTERFIELD • ETZLER FINANCIAL & INSURANCE • OLIVE CITY TAX PROFESSIONALS • PLACER TITLE COMPANY • AIRPORT AUTO REPAIR • KAY STEPHENS, MD • GREENWASTE OF TEHAMA • LOUISIANA PACIFIC CORP. • STEVE'S BACKHOE SERVICE Please help sponsor a classroom subscription Call Kathy at (530) 527-2151 to find out how. global equity strategist at S&P Capital IQ. ''This was a big miss on the ISM report,'' said Young. ''Regardless of what it means for the Fed, ultimately you're buying a stream of earnings and you want to see the economy doing well.'' Federal Reserve Bank of Atlanta President Dennis Lockhart also helped allay investors' concerns that the central bank was poised to stop the stimulus. He told Bloomberg Television Monday in an interview that Fed officials remain committed to the stimulus program. The S&P 500 index climbed 9.68 points to 1,640.42, up 0.6 percent. The Dow Jones industrial average rose 138.46 points to 15,254.03, a gain of 0.9 percent. The Dow got a boost from Merck, which rose 4 percent. The Nasdaq composite, which is heavily weighted with technology stocks, rose 9.45 points to 3,465.37, an increase of 0.3 percent. The yield on the 10year Treasury note ended the day barley changed from late Friday at 2.13 percent. The yield climbed as high as 2.17 percent in early trading, then fell as low as 2.09 percent after the manufacturing report was released. As Treasury yields fell, rich dividend-paying Hoyt-Cole Chapel of the Flowers Funerals • Cremations • Prearrangements 816 Walnut St., Red Bluff, CA (530) 527-1174 FD652 www.chapeloftheflowers.net Law Office of stocks like electric utilities and phone companies moved higher. Those sectors, socalled defensive stocks, had been investor favorites in the first quarter. They declined in May as bond yields rose. Despite the advance Monday, signs are emerging that this year's rally may be starting to falter. The S&P 500 index closed higher for a seventh straight month in May, but the index also logged its first back-toback weekly declines since November. On Friday the Dow plunged 208 points, its worst drop in six weeks. The Dow is still up 16.4 percent this year, and the S&P 500 is 15 percent higher. Stocks have surged as companies reported record earnings and on optimism that the housing market is recovering and hiring is improving. In commodities trading, oil climbed $1.48, or 1.6 percent, to $93.45 a barrel. Gold rose $18.90, or 1.4 percent, to $1,411.90 an ounce. The dollar fell against the euro and against the Japanese yen. The U.S. currency dropped back below 100 yen for the first time in three weeks. Among stocks making moves: Merck led the Dow higher after news that the drugmaker announced encouraging clinical results for a medicine to treat skin cancer. Merck rose $1.75 to $48.45. Cracker Barrel Old Country Store rose $5.82, or 6.5 percent, to $95.28. The restaurant chain said its fiscal third-quarter profit rose 30 percent as higher prices on its menus helped increase sales. Centene fell 1.3 percent after the Medicaid coverage provider said a Kentucky court ruled that it cannot prematurely end a contract that has generated steep losses. The stock lost 63 cents to $48.87. CHERYL A. FORBES Amazing Finds Estate Planning, Wills and Trusts Probate and Trust Administration NEW & USED FURNITURE & MUCH, MUCH MORE! 349 Pine Street P.O. 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