Stocks mostly higher on signs of economic growth

In a March 21, 2012 file photo, spe­cial­ist Paul Cosentino, right, directs trad­ing on the floor of the New York Stock Exchange. Stocks closed mostly lower Tues­day Aug. 14, 2012, after trad­ing slightly higher for much of the day. (AP Photo/Richard Drew,file)

PALLAVI GOGOI

AP Busi­ness Writer

NEW YORK — Signs that the U.S. eco­nomic recov­ery is advanc­ing, albeit slowly, sent stocks bounc­ing up and down in nar­row ranges for much of the day Wednesday.

The Dow Jones indus­trial aver­age closed with a loss of 7.36 points at 13,164.78. The broader Stan­dard & Poor’s 500 index was up 1.60 points at 1,405.53 and the Nas­daq com­pos­ite rose 13.95 points to 3,030.93.

U.S. indus­trial pro­duc­tion increased last month as fac­to­ries made more cars, com­put­ers and air­planes, accord­ing to the Fed­eral Reserve.

It was a sign that man­u­fac­tur­ing is recov­er­ing after a weak spring. Also, con­sumer prices were unchanged in July from June, as a small drop in energy costs off­set slightly higher food prices. The con­sumer price index hasn’t changed since March, which means that infla­tion is in check.

Lower infla­tion gives the Fed­eral Reserve more lee­way to launch new pro­grams intended to rekin­dle the econ­omy. The Fed sig­naled at a meet­ing in late July that it is ready to act if growth and hir­ing stays weak.

Recent reports have sug­gested that the econ­omy improved some­what in July. Employ­ers cre­ated the most jobs in five months, while con­sumers spent a lit­tle more at stores after three months of declines.

Many investors won­der if the econ­omy is frag­ile enough to cre­ate the sense of urgency for pol­icy mak­ers to act proac­tively. The slightly bet­ter out­look for the econ­omy could prompt the Fed to hold off on tak­ing action when its pol­icy com­mit­tee next meets in September.

“We’re in a period of very slow growth, though inter­est rates are low, and very lit­tle infla­tion,” said David Kotok, chief invest­ment offi­cer at Cum­ber­land Advi­sors. “Unless the U.S. econ­omy goes into a swoon and there is no pick up in retail sales and dete­ri­o­ra­tion in jobs growth or major shocks from Europe and China, the Fed will not take any action for now.”

The bond mar­ket is bet­ting that the Fed is not likely to act. Investors have been sell­ing low-risk U.S. gov­ern­ment bonds, send­ing the yield on the bench­mark 10-year Trea­sury note up to 1.81 per­cent Wednes­day. That’s up from 1.73 per­cent Tues­day and 1.66 per­cent late Monday.

As investors shuf­fled their money around, the Rus­sell 2000 index of small stocks gained the most of the major indexes, 0.9 per­cent. The S&P was up 0.1 per­cent, the Nas­daq 0.5 percent.

In the last few weeks of the sum­mer, trad­ing vol­umes in the stock mar­ket have been low. On Wednes­day, the num­ber of shares chang­ing hands on the New York Stock Exchange totaled just 2.6 bil­lion, com­pared to an aver­age of 4 bil­lion on an aver­age day. Investors may also be hold­ing off on tak­ing aggres­sive posi­tions ahead of a meet­ing of the U.S. Fed­eral Reserve in Wyoming at the end of this month.

On Wednes­day, the Dow traded within a range of just 54 points.

U.S. earn­ings were mixed.

Tar­get rose $1.12 to $64.50 after the retailer reported earn­ings that beat ana­lysts’ expec­ta­tions and raised its profit fore­cast for the year. Tar­get is prepar­ing its first expan­sion out of the U.S., into Canada.

Deere plum­meted $5.03 to $75.10 after the agri­cul­ture machin­ery maker reported results that were well below Wall Street’s expec­ta­tions. The com­pany attrib­uted its poor results to a slow­ing global econ­omy and the effects of a pro­longed U.S. drought. Deere also cut its rev­enue fore­cast for the year.

Sta­ples dropped $1.96 to $11.49 after the office and school sup­plies store said its income dropped 32 per­cent fol­low­ing weak sales in North Amer­ica and Europe. The results fell short of ana­lysts’ expec­ta­tions and the com­pany cut its full-year earn­ings forecast.

Aber­crom­bie & Fitch strug­gled to sell its preppy jeans and T-shirts in the pre­vi­ous quar­ter, but its results weren’t as bad as ana­lysts had fore­cast. The teen fash­ion leader also laid out plans for updat­ing its fash­ions. The stock soared 9 per­cent, or $2.90, to $35.23.

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