Indexes Still Up as Rally Fades
Stocks finished higher after a topsy-turvy session Tuesday as strong consumer confidence data and encouraging results from companies such as DuPont fed hopes of an economic recovery.
Despite the confidence report, the euro hit a four-year high against the dollar, closing at $1.107 in New York, up from $1.098 Monday. Traders said the euro’s strength suggested doubts about the U.S. economy among foreign investors.
On Wall Street, the Dow Jones industrial average gained more than 88 points in early trading after reports that the Conference Board’s index of consumer confidence for April rose more than expected.
But the rally ran out of steam, as some investors chose to lock in profits after the Dow’s more- than-1,000-point climb from the lows hit in mid-March.
The Dow finished up 31.38 points, or 0.4%, at 8,502.99. The broader Standard & Poor’s 500 index gained 3 points, or 0.3%, to 917.84.
The technology-laden Nasdaq composite index, which has outpaced the blue-chip indexes so far this year, added 9.06 points, or 0.6%, to 1,471.30 -- its highest close since Dec. 2.
Winners outnumbered losers by 19 to 14 on the New York Stock Exchange, and by about 8 to 7 on Nasdaq. Trading was active.
As worries about the Iraq war recede, investors are looking to this week’s economic data for more clues about the health of the U.S. economy. Better-than-expected first-quarter earnings, lower oil prices and easing worries about severe acute respiratory syndrome have helped give investors courage to buy stocks.
The latest consumer confidence data stirred investors’ optimism Tuesday because consumer spending accounts for about two-thirds of the U.S. economy and is critical to the recovery.
Economists still cautioned that better confidence figures may not last while the job market remains stagnant. The payrolls report Friday is expected to show another slide in jobs in April, taking total losses to more than half a million.
Market analysts also will pay close attention to comments by Federal Reserve Chairman Alan Greenspan, who is to give testimony to a congressional committee today. In this appearance, Greenspan will make his first comments on the economy since February.
Economists expect the Fed chief to be cautiously optimistic, pointing to positives such as a recent drop in oil prices and improving corporate profits.
Earlier Tuesday, after the start of trading, a separate economic report showed an unexpected surge in U.S. employment costs, especially for health insurance and pension benefits, indicating companies still are squeezed on costs even as they find it difficult to raise prices.
In other highlights:
* Dow member DuPont, the No. 2 U.S. chemical company, rose 64 cents to $42.37 after it reported it returned to a profit as higher sales offset surging energy and raw material costs, and investors brushed off its earnings warning for the second quarter.
* Taiwan Semiconductor, the world’s largest contract chipmaker, said its quarterly net profit fell 34% from a year ago. It still forecast strong second-quarter results, effectively calling an end to a slump that has dogged the firm since 2001. Its U.S.-traded shares also were among the most active on the NYSE, rising 91 cents, or 11.8%, to $8.60.
* Newell Rubbermaid, the maker of Rubbermaid home storage products, took a hit after it reported a net profit, contrasted with a loss last year. But the company said its second-quarter profit could fall below analysts’ estimates. Newell shares lost 95 cents to $30.05.
* Swedish telecommunications equipment maker Ericsson helped lift tech stocks after it said it would cut thousands more jobs. Its U.S.-listed shares surged $1.44, or 19.3%, to $8.89.