Economic Data Boost Stocks
Stocks closed broadly but modestly higher Wednesday amid another batch of strong economic reports. The market rebounded from a morning sell-off sparked by a New York subway incident that fueled fears of terrorism.
The economic news also pushed up Treasury bond yields, but it didn’t help the dollar. Gold briefly rose above the $400 mark, driven by the subway scare.
In slow trading heading into the Thanksgiving holiday, the Dow Jones industrial average edged up 15.63 points, or 0.2%, to 9,779.57. It was the fourth consecutive gain for the index.
The Standard & Poor’s 500 index rose 4.56 points, or 0.4%, to 1,058.45, while the Nasdaq composite gained 10.27 points, or 0.5%, to 1,953.31.
Winners topped losers by 2 to 1 on the New York Stock Exchange and by 4 to 3 on Nasdaq.
The Dow fell as low as 9,706 early in the day after strange fumes in a portion of New York’s subway sent six transit workers to the hospital. Police quickly said the incident wasn’t a terrorist attack, and the market rebounded.
Gold jumped as high as $402 an ounce in New York futures trading on news of the subway scare, then fell back, but still closed with a gain of $5.70 at $396.80. It’s up 14% this year.
The day started positively for Wall Street as the government said that new unemployment benefit claims last week fell to their lowest level in almost three years and that durable goods orders soared in October. A separate report showed rising consumer confidence this month.
Stocks had surged in the spring and again in recent months, buoyed by optimism about the economy. But mild profit taking had dominated the market for much of November until the last few days.
“The stock market has discounted some of the good news -- all of this is confirmation right now,” said Chris Staneluis, portfolio manager with the Armada growth funds. “But I think when fund managers come back next week, they’re going to take a look at these numbers and say, ‘Wow, this [economic] recovery is happening, and we better do something about it.’ ”
U.S. financial markets are closed today in observance of Thanksgiving. On Friday, markets will be open a half-day, closing at 10 a.m. PST.
With one month left in the year, pressure may grow on big investors to load up on stocks in the hope of boosting their 2003 performance, some analysts say.
The Dow is up 17.2% this year, the S&P; 500 is up 20.3%, and the technology-dominated Nasdaq composite is up 46.3%.
Stocks rising sharply Wednesday included H&R; Block, which jumped $4.01 to $53.41 after reporting higher earnings in its quarter ended Oct. 31; Allergan, up $4.14 to $75.90 after asking federal regulators to approve a pill for psoriasis; and PacifiCare Health Systems, up $3.66 to $64.46 on apparent optimism that it might gain from the planned federal overhaul of Medicare.
Gold-mining stocks also were strong. Placer Dome rose 70 cents to $17.70, and Newmont Mining jumped $1.59 to $47.34.
In other trading Wednesday, the dollar fell against the euro and the yen despite the economic reports.
“Clearly the growth story is not motivating foreign exchange markets,” said John McCarthy, director of currency trading at ING Financial Markets in New York. The euro rose to $1.194 from $1.179 on Tuesday, and is nearing the record high of $1.195 reached Nov. 18.
At the start of the year, one euro was worth $1.05.
Currency traders fear the massive U.S. trade and budget deficits will put more downward pressure on the dollar. Many also believe the Bush administration wants the buck to fall further to help make U.S. exports less expensive abroad, analysts say.
Treasury bond yields rose Wednesday on nervousness that the strengthening economy would hasten the day the Federal Reserve begins to tighten credit.
The 10-year T-note yield ended at 4.25%, up from 4.19% on Tuesday. The two-year T-note rose to 1.99% from 1.84%.
But yields have been trading in a narrow range for the last seven weeks, held down by the Fed’s public pledges to keep short-term interest rates low for an indefinite period.
*
Market Roundup, C7-8
