S&P;, Nasdaq Set Record Highs; Dollar Slumps Against Yen
U.S. stocks powered ahead on Tuesday, pushing key indexes to new highs.
Meanwhile, the dollar hit a 27-month low against the yen before rebounding somewhat. The dollar inched up against the new euro on the latter’s second day of trading.
On Wall Street, the Dow Jones industrial average shot up 126.92 points, or 1.4%, to 9,311.19, closing near the high for the day and within 64 points of its record of 9,374.27 set on Nov. 23.
For other key indexes, records fell again Tuesday: The Standard & Poor’s 500 rose 1.4% to 1,244.78 points and the Nasdaq composite leaped nearly 2% to 2,251.27.
The New York Stock Exchange composite, meanwhile, added 1% to 599.91 points, a hair’s breadth from its record close of 600.75 on July 17.
The NYSE index’s gains reflect the broader market’s advance in recent days, even though many investors remain focused on major blue-chip names.
Winners outnumbered losers by 17 to 14 on the NYSE on Tuesday, and by 23 to 18 on Nasdaq.
Analysts said traditional January inflows to retirement accounts are giving investment managers fresh cash to put to work in stocks.
“There’s definitely a seasonality to investment flows where diligent investors put as much as they can early on into 401(k)s, IRAs and the like,” said analyst Joseph Battipaglia of Gruntal & Co.
But for the most part, that retirement cash is targeting big-name stocks, especially in the red-hot tech sector.
Tech stocks also got a boost Tuesday from some bullish forecasts from Wall Street.
Microsoft soared $5.50 to a record $146.50 after analyst Michael E. Stanek at brokerage Lehman Bros. said the stock could rise to $185 in the next 12 months, driven by 32% earnings growth.
And key telecom stocks were lifted by news of a bidding war for AirTouch Communications.
In currency trading, the dollar fell for a sixth session against the yen on concern Japanese investors will sell U.S. assets in favor of Japanese bonds, whose yields have surged in the last six weeks.
The dollar fell as low as 110.49 yen from 112.07 on Monday, then ended in New York at 111.21. It has fallen from 124 yen in recent weeks.
A surge in Japanese bond yields--anticipating heavy government borrowing this year--is boosting the yen. But both of those trends are bad news for the stock market: The Nikkei-225 share index fell 1.4% to 13,232.74 on Tuesday after sliding 3.1% on Monday.
The U.S. bond market also is feeling the dollar’s weakness, on worries that Japanese are selling U.S. bonds to buy Japanese bonds.
The 30-year Treasury bond yield ended at 5.2%, up from 5.15% on Monday and the highest since just before Christmas.
In Europe, major stock markets were mostly higher Tuesday, but their gains were muted compared with Monday’s powerful rally, as the euro was launched.
The French market rose 1.3%, the Dutch market gained 1.4% and the Spanish market was up 1.9%.
The euro itself eased to slightly less than $1.18.
Among Tuesday’s highlights:
* Major tech stocks soaring again included IBM, up $6.63 to $189.63; Apple, up $2.06 to $43.31; Intel, up $2.44 to $123.25; and Micron Technology, up $4.06 to $54.
* The Internet sector was mixed. Yahoo rose $9.88 to $257.88 and EarthLink Network added $3.19 to $65.63, but EBay slid $16 to $224 and Internet America fell $4 to $22.75.
* Some industrial names were strong, including General Motors, up $3.75 to $74.63; Navistar, up $2.31 to $30.06; and Boeing, up $2.31 to $35.25.
* Airline stocks gained on optimism about traffic in the new year. Delta rose $2.56 to $54.50, Alaska Air jumped $3.44 to $46.88 and Northwest rose $1.75 to $26.38.
Market Roundup, C7
