By Nikolaj Gammeltoft
and Lu Wang
NEW YORK: The Dow Jones industrial average capped its best week since January, as disappointing economic data fueled bets that any Federal Reserve stimulus cuts this month would be moderate.
Safeway Inc. advanced 6.1 percent after Credit Suisse Group AG raised its recommendation for the shares. Intel Corp. gained 3.6 percent after Jefferies Group LLC upgraded the stock. GameStop Corp. surged 6.1 percent as U.S. video-game sales saw the first monthly rise since 2011, a research group said. Peabody Energy Corp. dropped 3.2 percent as the Environmental Protection Agency revises proposed rules for new power plants.
The Standard & Poor’s 500 index rose 0.3 percent to 1,687.99. The gauge climbed 2 percent in the past five days, its best week in two months. The Dow jumped 75.42 points, or 0.5 percent, to 15,376.06. It advanced 3 percent this week, the most since Jan. 4. About 5 billion shares changed hands on U.S. exchanges, 16 percent below the three-month average.
“The view is that we’re recovering and continue to do it in a slow pace,” said Channing Smith, who helps oversee about $1.2 billion at Capital Advisors Inc. in Tulsa, Okla. “The Fed will begin to taper but will be on a magnitude of $10 billion, which shouldn’t have an impact.”
Investors, who have been scrutinizing economic data to determine whether growth is robust enough for the Fed to slow stimulus at its policy meetings Tuesday and Wednesday, will see a reduction next week as no big deal, according to a Bloomberg Global Poll of investors.
Fifty-seven percent of those surveyed say they don’t expect a sudden change in the markets because investors already anticipate tapering action.
A report Friday showed inventories at companies increased more than forecast in July, trailing a gain in sales that signals a pickup in factory orders. The Thomson Reuters/University of Michigan preliminary September index of consumer sentiment fell to 76.8 from 82.1 last month, which was the lowest since April.
Investors are also watching renewed political wrangling over the approaching limit on federal spending. Government funding expires Oct. 1 and the Treasury is expected to exhaust its ability to borrow funds in mid-October, when it will hit the statutory debt limit.
U.S. House members left Washington for the weekend Thursday after leaders shifted strategies in an effort to win over dissenting Republicans willing to risk a financial crisis to sidetrack President Barack Obama’s health-care law. Republicans said they will try to use the spending-bill talks to delay the health-care law instead of defunding it.
The CBOE Volatility Index, the gauge of S&P 500 options prices known as the VIX, fell 0.9 percent to 14.16, capping an 11 percent five-day drop, its biggest weekly slide since July 5. The equity volatility gauge has tumbled 17 percent in September after rallying 26 percent in August, the biggest monthly gain since May 2012.
All 10 main industries in the S&P 500 advanced Friday.