Stocks Inch Up, Pushing Dow to New 2005 High
Stocks rose modestly Tuesday, helped by news that January retail sales were better than expected, excluding autos.
But many investors were wary ahead of Federal Reserve Chairman Alan Greenspan’s congressional testimony today and Thursday, traders said.
Even so, the Dow Jones industrial average and the Standard & Poor’s 500 index reached new 2005 highs.
Wall Street welcomed the Commerce Department’s report that retail sales were up 0.6% last month, not counting auto sales.
Retail stocks were broadly higher. The sector also was helped by news of a surprise takeover offer for Circuit City.
The Dow rose 46.19 points, or 0.4%, to 10,837.32, its best close since Dec. 28. The Dow is up 0.5% for the year.
Broader stock indicators also gained. The S&P; 500 was up 3.98 points, or 0.3%, to 1,210.12, a year-to-date high, although the index is still down 0.2% from its 2004 finish.
The Nasdaq composite index added 6.30 points, or 0.3%, to 2,089.21. It is down 4% this year after rising 8.6% in 2004.
Some investors remained hesitant before Greenspan gives his take on the economy and monetary policy. Although most on Wall Street expect Greenspan to reiterate the Fed’s current stance, calling for measured interest rate hikes, some analysts believe that he might sound a cautionary note, warning that the Fed could raise short-term rates at a faster pace if necessary to curb inflation.
Greenspan might seek to remind bond investors of the risks of pushing long-term yields lower as the Fed raises short-term rates, some analysts said.
Long-term yields have fallen sharply since October, but they have ticked up in recent days. The 10-year Treasury note yield rose to 4.10% on Tuesday from 4.07% on Monday.
“Greenspan has a history of using this meeting to try to curb the market,” said Bill Groenveld, head trader for VFinance Investments. “I wouldn’t be surprised if you end up seeing him making a statement that we weren’t expecting. The way long-term rates are going, he may have to shake things up a bit.”
In other market highlights:
* Crude oil futures in New York slipped 18 cents to $47.26 a barrel as traders weighed the possibility that OPEC would cut production next month.
* Struggling electronics retailer Circuit City surged $2.30 to $16.53 after Highfields Capital Management made a $3.25-billion bid for the retailer. Circuit City said it would carefully evaluate the $17-a-share proposal. Highfields said it wanted to take Circuit City private in order to be more aggressive in making changes to improve the chain.
An S&P; 500 gauge of retailers added 0.7% as 26 of its 30 members advanced. Department store chain Dillard’s gained 40 cents to $25.82. Best Buy rose 82 cents to $55.50.
* Cable TV giant Comcast climbed $1.05 to $32.36 on news that Warren E. Buffett’s Berkshire Hathaway doubled its stake in the company in the fourth quarter to 10 million shares.
Time Warner, Comcast’s top rival, gained 25 cents to $18.10.
* Apple Computer, maker of the iPod music player, advanced $3.78 to a record $88.41. Merrill Lynch & Co. raised its 12-month price forecast on the stock by 20% to $102 on speculation that Apple could team up with Sony to develop new products.
Shares of Apple have surged anew since Friday, when the company said it would split its stock 2 for 1.
* Shares of Molex and Deere had the biggest declines in the S&P; 500 after disappointing earnings reports. Molex, a maker of connectors for electrical and fiber-optic equipment, slumped $3.34 to $25.45. Tractor maker Deere lost $3.25 to $66.10.
* Among new stock offerings, Irvine-based mortgage investment company ECC Capital ended its first day of trading on the New York Stock Exchange at $6.75, the same as its initial offering price Monday.
Los Angeles-based Preferred Bank ended at $42 a share on its first day of trading on Nasdaq. The company sold 2.12 million new shares at $38 each Monday.
