US stocks rise despite terrorism fears

Wall Street ended a difficult week with a modest advance today after strong earnings from retailers Dillard’s and Nordstrom helped bolster investor expectations of a rebounding economy. But trading was muted by concerns about terrorism, and stocks suffered their second straight weekly loss.

“We’re seeing a continuing cloud over the market around the increased terrorism worldwide,” said Brian Bush, director of equity research at Stephens Inc.

“So despite the fact … that the economy continues to recover and grow, it seems that psychologically the market right now is looking for reasons not to go up.”

The Dow Jones industrial average closed up 9.11, or 0.1%, at 9,628.53, having fallen 71 points in the previous session.

The broader market also finished higher. The Nasdaq composite index gained 11.96, or 0.6%, to 1,893.88. The Standard & Poor’s 500 index rose 1.63, or 0.2% to 1,035.28.

For the week, the Dow fell 1.4%, the Nasdaq lost 1.9%, and the S&P declined 1.4%. It was the second inning week in the last four.

Terrorism fears weighed on the market after four bombings in Turkey since last Saturday, including attacks on London-based HSBC bank and the British consulate on Thursday. And the increasing health of the U.S. economy, while supporting stocks, is raising some other concerns for the market.

“Right now, investors are … basically convinced the recovery is here and that earnings growth will resume for awhile” but they’re worried the Federal Reserve might raise interest rates over the next six months, said John C. Forelli, portfolio manager for Independence Investment LLC.

“That’s the see-saw that we’re riding right now,” he added. “The terrorism concerns are also raising the overall level of volatility in the market.”

Bush agreed. He said that many investors are refraining from major bets to avoid posting losses for the year.

“From a portfolio manager’s perspective, we’ve had tremendous gains this year, and most portfolio managers are playing defence between now and the end of the year and trying to avoid missteps that will hamper their returns,” Bush said.

Better-than expected retail earnings, which indicated consumers’ increasing willingness to spend, supported the market.

Dillard’s Inc. jumped 1.07 to 15.57 after the retailer reported a quarterly loss that was narrower than Wall Street’s forecasts.

Nordstrom Inc. climbed 3.10 to 34.92 after the retailer posted profits that handily beat analysts’ estimates.

But Dow component Merck & Co. dropped 2.95 to 42.21 after the drug company said it would stop development of an experimental diabetes drug, citing potential health risks.

Walt Disney Co. fell 10 cents to 22.58 after the entertainment conglomerate posted better-than-expected quarterly earnings, citing in part strong performance from movie studio hits.

Advancing issues outnumbered decliners 8 to 5 on the New York Stock Exchange. Volume was light.

The Russell 2000 index, a barometer of smaller company stocks, rose 2.84, or 0.5%, to 525.92.