Optimism High as Stocks Extend Year-End Rally
The Dow Jones industrial average Monday scored its seventh advance in eight sessions as investors continued to pile into blue-chip shares, riding the year-end rally.
The broader market also finished higher despite the government’s latest terrorism warning. Bond yields and gold edged up while energy prices fell.
The Dow rallied at the opening, was flat for much of the day, then picked up steam in the final hour. It closed up 59.78 points, or 0.6%, at 10,338.00, its peak for the day and a 19-month high.
A broader blue-chip index, the Standard & Poor’s 500, also reached a 19-month high, rising 4.27 points, or 0.4%, to 1,092.94.
Tighter security was evident at the New York Stock Exchange after the government Sunday raised the national terror level to orange, indicating a high risk of terrorist attack. Homeland Security chief Tom Ridge said threat indicators were “perhaps greater now than at any point” since the Sept. 11 terrorist attacks.
But some money managers said most investors were unlikely to be deterred by the warnings, given optimism about the economy in 2004.
“Unless the terrorists are successful in stopping or interrupting global growth, the strength in the global recovery will offset the threat of terrorism,” Tim Woolston, who helps manage $3.9 billion at Boston Advisors Inc., told Bloomberg News.
The stock market’s year-end surge is feeding on itself as antsy investors give up hope that they might get lower prices if they wait, some analysts said. The Dow has gained 556 points, or 5.7%, since Nov. 28 and has lost ground in just five of 16 sessions since then.
Also, because big-name blue-chip stocks have lagged behind smaller stocks for much of the year, they offer a way for investors to play catch-up without feeling they are drastically overpaying, experts say.
The Dow is up 23.9% year to date, and the S&P; 500 is up 24.2%. By contrast, the technology-dominated Nasdaq composite index is up 46.5%, and the Russell 2,000 small-stock index is up 43.4%.
On Monday the Nasdaq index added 4.78 points, or 0.3%, to 1,955.80 and the Russell index rose 2.49 points, or 0.5%, to 549.37. Both remain below their recent peaks, reached Dec. 1.
Rising stocks outnumbered losers by 5 to 3 on the NYSE while winners had a narrow edge on Nasdaq. Trading volume was subdued compared with that of recent sessions.
In other markets, Treasury bond yields fell initially on news of the government’s terror alert, then moved higher. The 10-year T-note ended at 4.17%, up from 4.13% on Friday.
The dollar continued to weaken; the euro rose to $1.241 from $1.239 on Friday. Gold rose a bit, with near-term futures in New York adding $1.40 to $410.60 an ounce.
In other commodities trading, crude oil futures sank $1.15 to $31.87 a barrel as milder weather moved into the Northeast. That’s expected to trim fuel demand. Natural gas futures also fell sharply.
Among the day’s highlights:
* Automakers led industrial blue chips higher. Ford Motor surged $1.55, or 10.2%, to $16.79 after the company raised its 2003 operating earnings outlook, citing strong sales of its redesigned F-150 pickup truck. General Motors jumped $2.05, or 4.1%, to $52.41 after completing the sale of Hughes Electronics to News Corp.
* Other industrial winners included Honeywell, up 99 cents to $32.81; 3M, up $1.18 to $85.25; and United Technologies, up 95 cents to $95.05.
* NCR shot up $2.86 to $39.27 after a Morgan Stanley analyst raised her rating on the maker of automated cash machines, citing rising sales expectations.
* KB Home rose $2.81 to a record $72.81. The Los Angeles-based home builder last week reported stronger-than-expected fourth-quarter earnings. Other builders also gained, including Lennar, up $2.45 to $98.10, and Ryland, up $1.92 to $91.22.
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U.S. stock markets will be open normal hours today but will close at 10 a.m. PST on Wednesday and Friday. All markets will be closed Thursday, Christmas Day.
Next week, stock markets will be closed on New Year’s Day but will be open normal hours on Dec. 31 and Jan. 2.
