Major Indexes Rise on Late Rally
A late rally lifted major stock indexes into positive territory Tuesday, extending the market’s winning streak.
Treasury bond yields pulled back on news of terrorist attacks in Israel and Baghdad.
On Wall Street, the Dow Jones industrial average was off about 61 points in the afternoon, weighed down by mixed economic data and by terrorism fears. But the Dow shot up in the final 90 minutes to close with a gain of 16.45 points, or 0.2%, at 9,428.90, a 14-month high.
The Nasdaq composite index was up 21.62 points, or 1.2%, to 1,761.11, and the Standard & Poor’s 500 index added 2.61 points, or 0.3%, to 1,002.35.
Winners topped losers by nearly 2 to 1 on the New York Stock Exchange and on Nasdaq.
Blue-chip indexes have gained in nine of the last 10 sessions. What’s more, the market’s advance has been broad-based.
On Tuesday, the Russell 2,000 index of smaller stocks led the way, rising 7.78 points, or 1.6%, to 488.70, a 52-week high.
Analysts say demand for stocks has been underpinned by a belief that the economy will continue to improve, boosting corporate earnings.
“Many of the [company] conference calls I’ve listened to have said business is picking up,” Rose Papp, who helps manage $600 million for L. Roy Papp & Associates in Phoenix, told Bloomberg News.
Some investors have been troubled by the relatively slow trading volume of recent weeks and have questioned whether profit taking might hammer the market as many investors return from vacation in September.
Others say the path of least resistance still appears to be up.
“We’re obviously in the summer doldrums, but you know this market wants to go up,” said Scott Wren, equity strategist for A.G. Edwards & Sons.
Wall Street digested some disappointing economic data on Tuesday. The University of Michigan reported its preliminary August consumer sentiment index at 90.2, below July’s 90.9 level and analysts’ average forecast of 91.2.
But stocks got some support from a Commerce Department report showing that home construction rose in July to the highest level in more than 17 years, despite rising mortgage rates.
Treasury bond yields rose early in the session but fell later on news of the terrorist attacks.
The 10-year T-note yield ended at 4.36%, down from 4.46% Monday and the lowest level in a week.
The two-year T-note slid to 1.73% from 1.82%.
Some investors sought gold. Near-term gold futures in New York rose $3.20 to $361.60 an ounce. The price has gyrated between $340 and $370 since May.
For the S&P; 500 index, Tuesday’s close was the first above 1,000 since July 15.
“It is significant because the S&P; had trouble there in June and July,” John Roque, a technical analyst at Natexis Bleichroeder Inc. in New York, told Bloomberg News.
If the index quickly pulls back from this level, it could indicate that the latest rally is petering out, he said.
Among Tuesday’s highlights:
* Home builders were among the big winners. Centex climbed $2.69 to $78.59, Lennar rose $2.35 to $68.50, and Hovnanian Enterprises soared $4.21 to $58.96.
* Semiconductor stocks continued to resurge, building on Monday’s gains. Broadcom soared $2.50 to $25.35 after brokerage firms CIBC World Markets and Thomas Weisel raised their ratings on the stock, responding to the company’s upbeat third-quarter sales forecast Monday.
Among other chip makers, Intel added 28 cents to $26.47 and Advanced Micro Devices rose 32 cents to $9.23.
* In the retail sector, Staples jumped $2.15 to $22.53 after posting second-quarter earnings that topped analysts’ expectations by 2 cents a share and raising its outlook for the rest of the year.
Elsewhere in the retail sector, Dollar General rose 71 cents to $20.11 and Kohl’s added 25 cents to $62.70, but Home Depot dropped $1.74 to $32.16 after its quarterly sales report disappointed some investors.
* Software stocks rallied. Microsoft gained 92 cents to $26.62, Synopsys rose $1.29 to $69, and Ansys was up $1.18 to $35.80.
* Small California bank stocks were strong. A story in The Times on Monday said that mergers are on the rise again in the industry.
Western Sierra Bancorp jumped $1.99 to $33.50, Hawthorne Financial gained $1.08 to $38.84, UnionBanCal surged $1.74 to $46.51, and Pacific Union Bank rose $1.20 to $18.13.
* Many industrial and commodity stocks continued to gain on optimism about the economy. Potash surged $2.34 to $69.90, Weyerhaeuser was up 75 cents to $58.90, Vulcan Materials rallied 69 cents to $42.17, and Ameron rose 95 cents to $34.50.
* The Dow got a lift from United Technologies, which rose $1.74 to $78.73, its highest price since 2001.
Market Roundup, C6-7
