Stocks Add Modestly to Recent Gains
Wall Street closed mostly higher Tuesday, lifting some indexes of smaller stocks to record levels, as buyers continued to return after the pullback of the last two weeks.
The government’s upbeat revision to third-quarter economic growth helped underpin share prices, analysts said. The Commerce Department said the economy grew at an 8.2% annual rate in the quarter, the fastest pace in nearly two decades, and that corporate profits surged.
“Bottom line, the economy’s overall health is playing a greater role for the time being in determining the market’s direction,” said Joseph Keating, chief investment officer at AmSouth Asset Management.
The Dow Jones industrial average, which rallied more than 119 points on Monday, added 16.15 points, or 0.2%, to 9,763.94. It was the third consecutive advance for the Dow.
The Standard & Poor’s 500 index was up 1.81 points, or 0.2%, to 1,053.89.
The technology-dominated Nasdaq composite index, which rocketed 2.8% on Monday -- the largest percentage gain since July 7 -- fell back a bit. It lost 4.10 points, or 0.2%, to 1,943.04.
The market had advanced strongly in October on optimism about the economy but has struggled for much of this month amid a weaker dollar and rising oil prices. Still, analysts say the profit taking has been mild considering the gains this year.
The S&P; 500 index, which hit a 52-week high of 1,059.02 on Nov. 3, pulled back 2.4% through Thursday’s close. The Nasdaq index dropped 4.8% between Nov. 6 and Thursday.
But the selling was accompanied by lower trading volume -- a sign that many investors weren’t willing to part with their shares, analysts said.
The renewed demand for stocks in recent days has been evident in market breadth figures. On the New York Stock Exchange, winners topped losers by more than 2 to 1 on Tuesday. On Nasdaq winners beat losers by about 3 to 2.
Also, stocks of small and mid-sized companies, which have been market leaders this year, are back on top after recent selling. S&P;’s index of 600 smaller stocks rose 2.22 points, or 0.8%, to a record 265.09 on Tuesday. An S&P; index of 400 mid-size stocks rose 3.69 points, or 0.7%, to a record 563.45.
Among the mid-size stocks up sharply on Tuesday were Southland-based restaurant chain Cheesecake Factory, which rose $1.01 to $42.68; drug firm Ivax, up $1.03 to $21.60; and home builder Lennar, up $1.45 to $98.41.
Shares of many California banks also were in demand. Wilshire State Bank jumped $1 to $31.03, East West Bancorp gained 95 cents to $52.11 and City National surged $1.21 to $63.13. The closing prices of all three were record highs.
The market overall has been helped as the dollar’s value has firmed in recent sessions, after tumbling early last week. Also, oil prices have slumped as supply worries have eased.
Near-term crude futures edged up 3 cents to $29.77 a barrel Tuesday, but the price is down 10.5% over the last week.
The bond market also has been supportive of stocks, as yields have dipped over the last two weeks.
The yield on an index of 100 corporate junk bonds tracked by KDP Investment Advisors fell to 7.80% as of Monday, a record low.
Credit-rating firm Fitch Ratings said the dollar value of junk bonds that went into default in October was $1 billion, the lowest monthly total this year and another sign of the junk market’s recovery.
U.S. financial markets will be open for a full session today, will be closed Thursday in observance of Thanksgiving and will be open for a half-day Friday.
