US stocks tick higher after Obama deficit plan
NEW YORK—US stocks ticked higher Wednesday after President Barack Obama detailed his plans for cutting the deficit and a Federal Reserve report said the economy is improving at a moderate pace.
Surges in tech stocks pushed the Nasdaq Composite ahead of other gauges, while JPMorgan Chase’s solid earnings report was overshadowed by worries about its mortgage assets portfolio.
Meanwhile other banks were hit by a Fed call for banks to tighten up their mortgage procedures and warned of looming fines.
The Dow Jones Industrial Average added a slight 7.41 points (0.06 percent) to finish at 12,270.99, while the broader S&P 500 picked up a scant 0.25 point (0.02 percent) at 1,314.41.
The tech-heavy Nasdaq rose 16.73 (0.61 percent) to 2,761.52.
After trading lower at midday, the markets found inspiration in Obama’s speech detailing a plan to reduce the US deficit by $4 trillion — a plan that doubled as his 2012 re-election challenge to rival Republicans.
Obama proposed wielding a “scalpel and not a machete” on health care costs, the military and some bedrock social programs, contrasting his approach with Republicans’ heavy-handedness.
But the president’s plan also challenged Democrats to accept that cuts are inevitable.
Meanwhile the Fed’s Beige Book, issued around the same time, confirmed the economy was growing on a broad base around the country, though at an “only moderate” pace in many regions.
“Higher commodity costs were widely reported to be putting increasing pressures on prices,” the bank said.
The markets opened higher in the morning buoyed by JPMorgan’s 67 percent jump in earnings per share for the first quarter.
But the details of the bank’s asset quality forced its price down — it closed off 0.84 percent for the day.
“The bank had to overcome flat loan growth and CEO Jamie Dimon said he sees ‘extraordinarily high’ mortgage-related losses continuing for a while,” said Scott Marcouiller at Wells Fargo Advisors.
Other big banks named by the Fed as needing to fix their mortgage processing under threat of fines were losers as well: Citigroup (-1.1 percent); Bank of America (-1.5 percent) and Wells Fargo (-2.3 percent).
Nasdaq was pumped up by Dell’s 4.9 percent gain, on anticipation of a good 2011, a 1.0 percent jump in Google ahead of its earnings, and Riverbed Technology’s 12.4 percent surge on its promising first-quarter results.
The bond market rose slightly. The yield on the 10-year Treasury fell to 3.47 percent, down from 3.50 percent on Tuesday, while that on the 30-year bond stood at 4.55 percent, from 4.58 percent.
Bond prices and yields move in opposite directions.
