Upbeat Consumer Report Fuels Advance in Stocks
Stocks climbed Tuesday after consumer confidence bolted to its highest level since August, but an early rally faded as investors opted for caution ahead of a flood of corporate earnings reports.
The Dow Jones industrial average gave up most of an early 151-point gain before stabilizing late in the day and closing up 71.69 points, or 0.7%, at 10,353.36, snapping a four-day losing streak.
The Nasdaq composite index gained 11.68 points, or 0.6%, to 1,824.17, after climbing 31 points earlier and then dipping into negative ground in late trading. The Standard & Poor’s 500 index finished up 0.6%.
Winners edged losers by 5 to 3 on the New York Stock Exchange and by 4 to 3 on Nasdaq. Volume was light, as it is expected to be all week due to the Easter and Passover holidays. U.S. markets will be closed Good Friday.
The market’s rally was fueled by the Conference Board’s report that consumer confidence has surged this month as better prospects for jobs and a healthier business climate boosted Americans’ spirits. Consumer spending is viewed as a linchpin for any economic rebound.
Consumer stocks rose on the news, including Wal-Mart Stores, up 89 cents to $62.17, Home Depot, up 55 cents to $49, and Coca-Cola, which climbed 85 cents to $52.60 after reporting strong shipments.
The market also got an early lift from comments by Robert McTeer, president of the Federal Reserve Bank of Dallas, who helped to soothe investors’ growing worries that signs of economic strength could convince the Fed to raise interest rates later in the year. McTeer said inflation pressures should continue to ease in the coming months, leaving the Fed room to hold off on policy adjustments.
But a government report that orders for some durable goods fell unexpectedly in February revived doubts among investors about the strength of the economic recovery and the outlook for first-quarter corporate profits.
“Until we get the string of earnings that are due to start hitting in the next few weeks, I think the market is going to struggle to find any persistent direction,” said Charles White, president of investment firm Avatar Associates.
McTeer’s comments and the durable goods report helped push down bond yields. The yield on the benchmark 10-year Treasury note slid to 5.34% from 5.41% on Monday. The Treasury is set to sell a record $25 billion in new two-year notes today.
In other market news:
* A rally in financial-services firms’ shares helped the Dow. J.P. Morgan Chase rose 20 cents to $35.15; Citigroup climbed 50 cents to $49.15 and American Express gained 22 cents to $40.60. The Philadelphia Stock Exchange’s bank index rose 1.1%.
* The latest merger news helped boost the market. Royal Dutch/Shell Group said it will acquire Pennzoil-Quaker State, maker of the top two motor oil brands in the United States, for $1.8 billion in cash. Pennzoil-Quaker jumped $6.01 to $21.50; Royal Dutch gained 65 cents to $53.45.
* Accounting jitters came to the forefront again after computer security provider Network Associates said federal securities regulators are investigating its past accounting practices, forcing the company to delay plans to buy the rest of McAfee.com. Network Associates, down $2.77 at $22.23, was the fourth most actively traded stock on the NYSE. McAfee.com fell $2.96 to $15.55.
Also, Tyco International eased 34 cents to $32. The company’s CIT Group finance unit raised $2.5 billion in a bond offering, but at higher yields than comparable bonds at other firms. Tyco’s accounting has been the subject of repeated scrutiny.
* Auto parts makers Dana, BorgWarner and Dura Automotive Systems climbed after saying first-quarter profits will exceed forecasts because auto makers built and sold more vehicles than expected. Dana rose 74 cents to $19.33, BorgWarner gained $2.29 to $60.78, and Dura Automotive jumped $3.57 to $18.50.
Market Roundup, C6-7
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