Wall St. Posts Strong Gains
The bulls took commanding control of the stock market Friday, sending share prices broadly higher on news that U.S. fourth-quarter economic growth was faster than previously estimated.
The report also drove short-term interest rates higher on the assumption that the Federal Reserve’s credit-tightening campaign may be far from over.
On Wall Street, investors focused on the good news in the government’s estimate that the real growth rate in gross domestic product was an annualized 3.8% in the fourth quarter, up from the previous estimate of 3.1%.
The report showed “there is still great vitality out there,” said Joseph Battipaglia, chief investment officer at Ryan, Beck & Co.
That could be bullish for corporate earnings this year.
The Dow Jones industrial average jumped 92.81 points, or 0.9%, to 10,841.60 -- its highest closing level since the 3 1/2-year high of 10,854 reached Dec. 28.
The broader Standard & Poor’s 500 index gained 11.17 points, or 0.9%, to 1,211.37, the best level since Dec. 31.
Buyers also snapped up smaller stocks. Both the S&P; small-stock and mid-stock indexes rose more than 1% and closed at all-time highs.
The technology-dominated Nasdaq composite index continued to lag behind other indexes. It was up 13.70 points, or 0.7%, to 2,065.40.
Winners topped losers by more than 3 to 1 on the New York Stock Exchange and by about 2 to 1 on Nasdaq.
Stocks had tumbled Tuesday, when rising oil prices and a falling dollar triggered heavy profit taking. The Dow plunged 174 points that day. But buyers quickly returned.
For the week, the Dow tacked on 0.5%, the S&P; 500 rose 0.8% and Nasdaq added 0.3%.
By contrast, investors remained wary of the Treasury bond market, where yields have rebounded sharply over the last two weeks. The strong GDP report Friday raised new concerns about how much more the Fed was likely to boost short-term interest rates.
The report was “all the more reason for the Fed to keep raising interest rates to slow the economy,” Tony Crescenzi, bond market strategist at Miller Tabak & Co., told Bloomberg News.
The two-year Treasury note yield rose to 3.52%, up from 3.48% on Thursday and the highest since 2002.
Longer-term yields were relatively tame, however. The 10-year T-note ended at 4.27%, down from 4.29% on Thursday and unchanged from a week ago. But the 10-year T-note has jumped from just below 4% on Feb. 9.
In currency trading, the dollar remained under pressure. The euro rose to $1.324 from $1.321 on Thursday.
Among the day’s market highlights:
* Energy stocks remained on a hot streak as crude oil futures in New York held above $50 a barrel, adding 10 cents to $51.49. The XOI index of 13 major oil stocks rose 1.8% and is up nearly 20% this year. Exxon Mobil jumped $2.13 to $63.26, Unocal gained $1.43 to $54.43 and Anadarko soared $5.73 to $77.73.
* Many other commodity-related stocks also were strong, tracking the latest rally in commodity prices. Copper miner Phelps Dodge rocketed $5.43 to $105.80; U.S. Steel shot up $3.41 to $63.12.
* Industrial equipment stocks rallied on optimism about the economy. Ingersoll-Rand gained $2 to $83; Deere was up $1.82 to $70.59.
* Many home builders’ stocks hit record highs. Pulte Homes jumped $5.17 to $78.62. The company on Thursday reaffirmed its estimate of 20% earnings growth this year. Among other builders, KB Home rose $5.38 to $126.38 and Standard Pacific surged $4.40 to $82.20.
* On the downside, some Internet-related issues were weak. Google fell $3.02 to $185.87 and EBay slipped 13 cents to $42.24.
But semiconductor stocks gained, lifting the SOX index of 19 major chip-related stocks 2.2% to its highest since early December. Intel was up 39 cents to $24.09 and Texas Instruments gained 74 cents to $26.70.
