By KEN SWEET
NEW YORK — U.S. stocks rebounded Wednesday and had their best performance in more than a month, led by gains in health care and consumer staples companies.
Once again, investors were willing to step in to buy any noticeable dip in the market, even as more bad news emerged about Europe’s economy and worries over violence in Iraq and Syria continued.
The Dow Jones industrial average (^DJI) advanced 154.19 points, or 0.9 percent, to 17,210.06, its best day since Aug. 18. The Standard Poor’s 500 index (^GPSC) rose 15.53 points, or 0.8 percent, to 1,998.30 and the Nasdaq composite (^IXIC) rose 46.53 points, or 1 percent, to 4,555.22.
The gains came after three days of losses for the SP 500 and two straight days of triple-digit losses for the Dow Jones industrial average. With the gains Wednesday, the Dow recovered more than half of what it lost Monday and Tuesday.
The biggest gainer in the SP 500 was Bed Bath Beyond (BBY), which rose $4.64, or 7.4 percent, to $67.33. The home furnishings company reported a quarterly profit of $1.17 a share, two cents above analysts’ expectations. The company also raised its full-year forecast.
Walmart (WMT) rose $1.48, or 2 percent, to $77.08, making it the second-biggest advancer in the Dow. The retail giant took a big step into the financial services sector, announcing a new checking account program for customers in collaboration with Green Dot. The news sent Green Dot (GDOT) shares soaring $4.59, or 24 percent, to $23.41.
Investors also got a positive report on the U.S. economy. Sales of new homes jumped 18 percent in August, reaching an annual rate of 504,000, according to the Commerce Department, far better than the 430,000 rate economists had expected.
Even with Wednesday’s gain, there’s a lot of caution in the market, traders say.
Investors continue to focus on Europe’s economic malaise and tensions in the Middle East after the U.S. and several Arab nations attacked the Islamic State group’s headquarters in Syria.
The Ifo business confidence index in Germany, Europe’s largest economy, dropped for a fifth month in September. The decline was larger than expected and confirmed that Europe’s economy remains weak. The day before, a closely watched business gauge for the region fell to a nine-month low. The eurozone’s economy has been flat or barely growing since April, hobbled by the lingering effects of a debt crisis, uncertainty over a conflict in Ukraine and a lack of confidence among consumers, businesses and banks.
“It’s clear now that the Russian sanctions are causing a slowdown in the European economy, particularly manufacturing,” said Anastasia Amoroso, a global markets strategist at JPMorgan Funds. “But we see this as a temporary soft patch.”
Health care stocks rebounded after taking a beating at the start of the week on news that the U.S. was tightening rules on a tax-saving maneuver called an “inversion.” Many of the companies using the tactic, in which a smaller company is acquired overseas so that the U.S. company can move its headquarters there and take advantage of lower tax rates, have been health companies.
AbbVie (ABBV), which fell nearly 2 percent Tuesday, rose 2.6 percent Wednesday.
U.S. government bond prices fell. The yield on the 10-year Treasury note rose to 2.57 percent from 2.53 percent the day before.
In other markets, benchmark U.S. crude oil rose $1.24 to $92.80 a barrel on the New York Mercantile Exchange. Oil rose after the government reported a larger-than-expected decline in oil stocks. Brent crude, a benchmark for international oils used by many U.S. refineries, rose 10 cents to close at $96.95 on the ICE Futures exchange in London.
In other energy futures trading on the NYMEX, wholesale gasoline rose 3.5 cents to close at $2.664 a gallon, heating oil rose 0.6 cent to close at $2.689 a gallon and natural gas rose 9.5 cents to close at $3.911 per 1,000 cubic feet
The euro slid to $1.28 and the dollar rose to 108.94 Japanese yen. The price of gold fell $2.50 to $1,219.50 an ounce. Silver fell eight cents to $17.70 an ounce and copper rose two cents to $3.05 a pound.
What to Watch Thursday, Sept. 25:
- At 8:30 a.m. Eastern time, the Labor Department releases weekly jobless claims; and the Commerce Department releases durable goods for August.
- Freddie Mac releases weekly mortgage rates at 10 a.m.
- Nike (NKE) and Micron Technology (MU) release quarterly financial statements after U.S. financial markets close.
The first step is to know how much you currently owe on each credit card, said Gail Cunningham, spokesperson for the National Foundation for Credit Counseling, the Washington, D.C.-based national nonprofit financial counseling organization.
If you don’t know, you’re doing personal finance wrong.
“Burying your head in the financial sand won’t solve anything — there are no answers down there,” she said.
Another indicator that you are heading for trouble is if you find yourself near the maximum amount allowed on your lines of credit. If you’re considering applying for new lines of credit because the existing ones are maxed out, you’ll only make matters worse, NFCC’s Cunningham said. “The last thing you need is more credit,” she said. “Instead, probe to see why you are relying so strongly on credit cards to support your lifestyle.”
It’s important to minimize “percentage utilization” and maximize “credit available,” said Kevin Gallegos, vice president of the Phoenix operations with Freedom Financial Network, a company which helps consumers with debt issues.
“If you have a credit card with a limit of $10,000, and you owe $3,500 on it, that’s 35 percent utilization,” he said. “Anything over 35 percent is considered is high, a warning sign that you may be living beyond your means and can impact credit scores.”
Consumers who are current on their vehicle payment are a step ahead of their counterparts; if you’re behind, you’re on a rocky financial road.
If you are facing a money crunch, prioritize your bills, including making payments for your apartment or house and your monthly auto loan.
Another indicator that you are nearing serious financial issues is you have overdrawn on your checking account more than twice in the past 12 months. The overdraft fees are only adding to your dilemma. Instead, use free budgeting software or load an app from your bank that allows you to check your balance as often as you need to, even if it is daily. Some bills take longer to clear, so your current balance may not reflect that.
If you lack an emergency savings account, you could be headed for disaster if you run into car problems, lose your job or have a minor accident that prevents you from working. Only 51 percent of Americans have more emergency savings than credit card debt, according to a Bankrate.com (RATE) report. The survey also found that 28 percent of people have more credit card debt than emergency savings, the highest percentage in the past four years while 17 percent have neither emergency savings nor credit card debt.
“Since the recession, people recognize how important emergency savings is,” said Bankrate’s McBride. “They have less appetite for credit card debt. Despite that recognition, people have had a difficult time making headway for savings in an environment where income is stagnant.”
Receiving collection calls and notices is another sign that you aren’t living within your means. Many creditors are willing to negotiate your payment amount or waive some fees temporarily so consumers who try to seek a remedy before their debt goes into collection are facing less damage to their credit score.
Consumer spending can easily wind up being bad debt, which is debt that is used for the consumption of goods with little to no long-term value or goods with diminishing value, said Jason Ayala, a private wealth adviser in Phoenix for Ameriprise (AMP), the financial services company.
“An example of bad debt is carrying credit card debt that was used to subsidize a standard of living that exceeds your income,” he said. “If used appropriately, debt can be a very powerful and beneficial tool — if not it can derail even the best laid financial plans.”
Even if it was a one-time occurrence, applying for a credit card cash advance, payday loan, title loan or borrowing from your 401(k) or IRA in the past 12 months is a sign that you need to regain control of your finances.
“Adding new debt on top of old is a financial death trap,” Cunningham said. “Balances grow, and you end up paying interest on the interest. Digging out of debt is impossible unless this practice stops.”
If you are spending more than 28 percent of your gross salary paying rent or your mortgage that hampers your ability to maintain a moderate standard of living. Some lenders approved mortgages for homeowners to borrow up to 35 percent of their income during the past decade, but experts advise against spending that close to the threshold. Consider refinancing your mortgage, obtaining a roommate or at least cutting back on other bills or expenses. The 28 percent mark is a good rule of thumb, but it may vary depending on where and how you live, Gallegos said.
“Someone who lives in the heart of San Francisco or Manhattan and doesn’t own a car may have a higher percent for the home category, but a lower allocation for transportation,” he said.
Being able to maintain your current lifestyle without using your credit cards is a good sign. In July, total consumer revolving debt, which includes credit card debt, rose by 7.4 percent from June.
“This is a time when consumers can and should be saving more of their personal income compared to driving up debt,” Gallegos said.
Consumers should aim to save 10 percent of their income.
Living within your means on a daily basis and using credit cards only in real emergencies is the best option.
“Paying down credit card debt is one of the best investments you could ever make since the effective rate of return easily can approach 20 percent,” he said. “In addition, having no credit card debt is in itself a financial cushion. It will require strict discipline, belt-tightening and a revision of your goals.”