Stocks Gain for 5th Straight Day
Stocks extended their recent winning streak Tuesday, withstanding a choppy session as investors balanced hopes that a U.S.-led attack on Iraq would be a quick success against concerns about a sluggish economy.
“Everyone is trying to digest the geopolitical and economic news and trying to determine if this rally has legs,” said Andrew Baker, senior Nasdaq trader at Wedbush Morgan in Los Angeles.
The Standard and Poor’s 500 index rose 3.66 points, or 0.4%, to 866.45 and the Dow Jones industrial average was up 52.31 points, or 0.6%, to 8,194.23. It was the fifth straight gain for both benchmarks -- the longest daily winning streak for the Dow since April 2001 -- and came on the heels of Monday’s monster rally, which pushed the Dow up 282 points.
The tech-laden Nasdaq composite index added 8.28 points, or 0.6%, to 1,400.55, its first close above 1,400 since January. The Nasdaq has gained more than 10% in a week.
Advancing stocks beat decliners by 6 to 5 on both the New York Stock Exchange and Nasdaq in active trading.
The narrow margin of winners over losers reflected the ambivalence of investors, who were stymied somewhat by the Federal Reserve’s cryptic behavior.
The Fed, as expected, held interest rates steady after its Tuesday policy-setting meeting. But in an unusual move, the central bank jettisoned its so-called balance of risks assessment, saying it could not “usefully characterize” the economy given the uncertainties that abound.
“It is a head-scratcher indeed,” said Lara Rhame, U.S. economist at Brown Bros. Harriman. “Unfortunately it’s a bit of a reminder that policymakers do not have a lock on knowledge. It sounds as if they are as uncertain as we are.”
Further questions arose about the health of the economy after a report showing a tumble in U.S. housing starts last month. The data weighed on stocks of home builders.
“Everything’s got to go right for the market to keep rallying,” said Todd Leone, head of listed trading at S.G. Cowen. “But I think everyone realizes the economy’s still weak. I think the market is going to take a rest.”
Despite the economic concerns, yields on Treasury bonds continued their recent climb as investors who snapped up the government securities as a haven from war fears moved their money into stocks. The yield on the benchmark 10-year Treasury note rose to 3.91% from Monday’s close of 3.84%. It closed at 3.56% on March 10.
Still, many investors are waiting to see whether an expected military strike on Iraq goes smoothly for the United States before pouring more money into the stock market. The outbreak of hostilities came a big step closer Tuesday when Iraqi President Saddam Hussein scorned an ultimatum issued Monday by President Bush giving him 48 hours to flee or face war.
Among the day’s highlights:
* Tobacco stocks were slammed amid renewed talk of a case brought by the Justice Department, which demands that the biggest cigarette makers be ordered to forfeit $289 billion in profits. Dow member Altria Group, formerly Philip Morris, sank $2.12 to $32.60. R.J. Reynolds Tobacco sank $3.12 to $33.57 and UST dropped 29 cents to $27.80.
* The S&P; home-building index fell almost 1% after the disappointing report on housing starts. Centex closed down 26 cents to $52.34, while KB Home declined 54 cents to $46.
* Chemical companies, which use oil as a raw material, gained as crude prices fell. DuPont, the second-largest U.S. chemical maker, added $1.38 to $40.08. Dow Chemical, the largest, rose 49 cents to $28.86. Near-term oil futures slid more than 9% in New York.
* Dow stock Procter & Gamble rose $1.12 to $86.62 after the consumer products giant raised its quarterly profit outlook. The company also said it would take control of German hair care firm Wella in a $5.7-billion deal, giving P&G; a boost against French rival L’Oreal.
* Gateway ended flat at $2.40, having fallen to as low as $2.20 earlier. The No. 3 U.S. personal computer maker has warned its first-quarter results would widely miss forecasts and said it would slash its workforce by 17% in a bid to cut annual costs by more than $400 million. Among rivals, Dell Computer fell 10 cents to $28.06, while Hewlett-Packard rose 34 cents to $16.74.
* Human Genome Sciences, a developer of gene-based drugs, rallied 92 cents, or nearly 13%, to $8.10. The company said it was developing an immune system drug that could help fight the effects of exposure to anthrax.
* European markets were mixed after their recent gains. Indexes in Germany and Britain gained 3.9% and 0.7% respectively, but stocks fell 1.3% in France. Germany’s DAX index has soared 17% in the last four sessions.
Market Roundup, C4-5
