US stocks finish week with gains despite Ukraine fears

Trader Neil Catania, center, works on the floor of the New York Stock Exchange, Friday, May 2, 2014. US stocks finished higher for the week, even as intensifying concerns over Ukraine partially offset positive sentiment from some strong economic reports and accelerating Wall Street deal-making. AP PHOTO/RICHARD DREW

NEW YORK—US stocks finished higher for the week, even as intensifying concerns over Ukraine partially offset positive sentiment from some strong economic reports and accelerating Wall Street deal-making.

All three indices posted increases. The Dow Jones Industrial Average rose 151.43 (0.93 percent) to 16,512.89, while the broad-based S&P 500 advanced 17.74 (0.95 percent) to 1,881.14.

The tech-rich Nasdaq Composite Index notched the biggest increase for the week, adding 48.34 (1.19 percent) at 4,123.90.

The US Federal Reserve, as expected, continued a plan to gradually taper its bond-buying stimulus program, while maintaining ultra-low interest rates.

But the US central bank also released a fairly sunny outlook, saying economic activity “has picked up recently.” The Fed’s remarks helped push the Dow to its first record of 2014 on Wednesday.

The Commerce Department on Thursday said gross domestic product grew by a strikingly tiny 0.1 percent in the first quarter, but markets largely disregarded the figure as backward-looking and skewed by exceptionally cold weather that depressed activity.

Wall Street generally smiled on Friday’s US labor report, which showed the economy added 288,000 jobs in April, far above the estimates and marked the fastest job growth in more than two years.

“It feels that the economy is gaining steam, that growth is going to accelerate and, by and large, the Fed will remain very accommodative,” said Bill Lynch, director of investment at Hinsdale Associates.

Yet stocks closed the week on a sour note, with all three indices posting losses Friday following a surge of violence in Ukraine and new threats of sanctions on Russia by President Barack Obama.

“This Ukraine thing keeps grinding along and it doesn’t appear it’s going to end anytime soon,” said Brent Schutte, market strategist at BMO Global Asset Management.

“People are worried this could turn into something a little bit bigger.”

Schutte said Wall Street banks are producing more reports on Ukraine and organizing conference calls on the situation, a sign of rising concern.

The week’s biggest corporate news included pharmaceutical giant Pfizer’s thus-far unsuccessful effort to woo AstraZeneca in a deal worth $100 billion or more.

Pfizer opened the week with a dramatic public announcement of its interest in buying the British company, outlining a range of advantages from a beefed-up product pipeline to lower taxes.

Pfizer raised its bid on Friday, but AstraZeneca said no for a third time, calling the latest $106 billion offer “inadequate.”

“It seems the main driver behind the deal is the desire of Pfizer to shelter $70 billion of its cash pile from US taxation rules, and that doesn’t seem a sufficiently good reason to do a deal if you are AstraZeneca,” said analyst Michael Hewson of CMC Markets

But other major deals advanced, keeping 2014 on track to be a strong year for mergers and acquisitions.

The board of French industrial giant Alstom accepted a $17 billion bid from General Electric for its energy assets, giving momentum to a transaction that some French government officials have criticized.

Also, US nuclear power generator Exelon announced a deal to buy power company Pepco Holdings for $6.83 billion in cash.

Other major corporate stories included Ford Motor’s announcement that Mark Fields would take over on July 1 as chief executive from the departing Alan Mulally.

Bank of America said it uncovered incorrect data submitted to regulators for its most recent “stress test,” an announcement that immediately prompted the Fed to halt the bank’s plans for paying dividends and buying back shares.

While the balance of earnings reports continued to best expectations, there were a few noteworthy exceptions. Perhaps the biggest was Twitter, which sank to an all-time low after reporting average monthly users that lagged expectations.

Next week’s agenda includes a handful of major earnings reports, including AIG, Walt Disney company and Pfizer, which will undoubtedly face questions on the latest on its AstraZeneca campaign.

Economic releases include the Institute for Supply Management report on the services sector and the US trade balance. Fed Chair Janet Yellen is also scheduled for a pair of appearances before congressional committees.