Stocks Edge Up Ahead of Holiday, Extending Rally
Stocks closed out August with a gain, extending this year’s powerful rally as investors bet on a continuing economic recovery.
Trading was light Friday, as it had been all week, but the market’s bulls remained in charge. Rising stocks outnumbered losers by 2 to 1 on the New York Stock Exchange and by 18 to 13 on Nasdaq.
In other action, gold prices neared the seven-year highs reached in February. Treasury bond yields rose.
On Wall Street, the technology-dominated Nasdaq composite index added 10.27 points, or 0.6%, to 1,810.45, the highest close since April 2002.
The Standard & Poor’s 500 index rose 5.17 points, or 0.5%, to 1,008.01, nearing the 2003 high of 1,011.66 reached on June 17.
The Dow Jones industrial average rose 41.61 points, or 0.4%, to 9,415.82, close to the 14-month high of 9,428.90 reached on Aug. 19.
For the week, Nasdaq climbed 2.6%, the S&P; gained 1.5% and the Dow rose 0.7%.
Nasdaq jumped 4.4% for all of August, the seventh straight monthly gain. Blue-chip indexes were up for a sixth month.
Many analysts have been encouraged that the market held its gains this summer, despite rising bond yields.
The breadth of the rally also has impressed many experts. On Friday, the Russell 2,000 index of smaller stocks and an S&P; index of mid-size stocks hit their best levels in more than a year.
“This is potentially good news.... We increase the chance of breaking out to the top side as traders return to the market” in September, said Chris Johnson, analyst at Schaeffer’s Investment Research in Cincinnati.
So far this year, the Nasdaq composite is up 35.6%, the S&P; 500 is up 14.6%, and the Dow is up 12.9%.
Mostly upbeat economic data Friday contributed to optimism about the business outlook. Consumer spending rose in July, the government said, and a Chicago-area index of August manufacturing activity signaled growth in that sector for the fourth straight month.
The data hurt the bond market, however. The 10-year Treasury note yield rose to 4.46% from 4.42% on Thursday but was down from 4.47% a week ago.
The two-year T-note ended at 1.97%, up from 1.93% on Thursday and 1.92% a week ago.
Gold prices soared, lifting the near-term futures contract in New York $5.20 to $375.70 an ounce -- the highest since the metal reached $379 in February.
Traders said gold had been boosted by fears of more violence in the Middle East and by technical trading related to the dollar’s moves against the euro.
Some also said pure speculation in gold futures was rampant.
“One thing that is clear is that the gold price is much higher than can be justified by physical” demand for it, said John Reade, precious metals analyst at brokerage UBS.
Among Friday’s highlights:
* Tech stocks leading Nasdaq higher included KLA Tencor, up 76 cents to $59.45; Yahoo, up $1.04 to $33.39; Citrix Systems, up 79 cents to $20.71; and Apple, up 42 cents to $22.61.
* JNI jumped $1.07 to $6.86 after the networking products company agreed to be bought by Applied Micro Circuits for $7 a share. Applied Micro fell 11 cents to $5.82. Both firms are based in San Diego.
* Wireless services giant Nextel Communications surged $1.27 to $19.33. A regulatory filing showed that Warren E. Buffett’s Berkshire Hathaway has bought Nextel bonds and preferred stock with a face value of more than $500 million.
* Among blue chips, Caterpillar rose $1.18 to $71.83, AT&T; gained 60 cents to $22.30, and Bank of America was up 95 cents to $79.25.
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Market Roundup, C4-5
