Late Surge of Buying Lifts Dow 13
U.S. stocks rose in a late-day rally Wednesday as investors, flush with cash, jumped back into the market after Tuesday’s retreat from records.
“Some people have been holding cash and the market surprised them by rising so quickly, so when it pulls back, they go back in,” said Joseph Stocke, a senior portfolio manager at Meridian Investment.
The Dow Jones industrial average rose 13.13 points, or 0.1%, to 9,314.28, short of the record 9,374.27 it set Monday. The broader Standard & Poor’s 500 index gained 3.88 points, or 0.3%, to 1,186.87. The technology-heavy Nasdaq composite index jumped 19.33 points, or 1%, to 1,985.21. The Russell 2,000 index of smaller companies rose 2.72 points to 399.32.
Advancing issues outnumbered decliners by a 10-9 margin on the New York Stock Exchange, while Nasdaq gainers led by an 11-9 ratio.
Volume eased from the busy pace of the prior two sessions. About 719.96 million NYSE-listed shares changed hands, down from 943.79 million Tuesday.
U.S. bond prices rose for the fifth time in six days, pushing yields to the lowest this month amid optimism that inflation will stay low even as the economy keeps growing. The 30-year Treasury bond yield fell to 5.18%, the lowest since Oct. 30, from 5.21% on Tuesday.
The dollar rose against the yen amid fresh signs that Japan’s economy won’t soon emerge from recession and on renewed optimism about U.S. economic strength. The dollar rose to 121.73 yen from 121.18 on Tuesday.
U.S. bond investors were undaunted by new reports showing a strong jobs market, rising consumer confidence and surging home sales.
“Improving business activity doesn’t always translate into higher inflation,” said Jon Ender, who helps oversee $7 billion at Chicago Corp. Asset Management. “We still expect to see rates headed lower.”
With the economy expected to grow and yields low, this is an ideal time for corporations to sell debt. Monsanto plans to sell $2.5 billion in bonds next week and Seagram plans to sell $2 billion in the second week of December.
Among Wednesday’s highlights:
* Citigroup gained $1.75 to $52.38 as the biggest gainer among the 30 Dow stocks. The largest U.S. financial services company is expected to announce cost-cutting measures in the months ahead as it streamlines its business after merging with Travelers Group.
* Advanced Micro Devices, which makes microprocessors for personal computers, rose $3.50 to $29.13, the biggest gainer in the S&P; 500. Analyst Thomas Kurlak at Merrill Lynch, a skeptic on many semiconductor stocks, raised his rating on AMD to “accumulate” from “neutral.”
* Johnson & Johnson fell $2.44 to $82.81. The FDA this week rejected a diabetes drug J&J; was working on, and analysts said the setback highlighted the company’s weakness in drug research.
* Books-A-Million rose $8.56 to $12.94 after announcing what amounted to a relaunch of the bookseller’s Web site. Likewise, Onsale jumped $16.13 to $60, rallying for a second session after the company announced the launch of an online holiday store.
Overseas, Japan’s Nikkei stock average dipped 0.6%, while Germany’s DAX index and France’s CAC-40 edged higher.
Market Roundup, C8
