Stocks end with small gains
Wall Street ended a volatile session with modest gains Wednesday after an initial surge on news of strong November retail sales faded by the closing bell on energy-price concerns.
Treasury bond yields jumped on the retail report.
The Dow Jones industrial average closed up 1.92 points at 12,317.50 after reaching a record intraday high of 12,368 early in the session.
The market was buoyed at the opening by the government’s report that retail sales rose 1% last month, surpassing expectations and marking the biggest gain since July.
“The consumer is still able to lend reasonable support to the economy,” said Timothy Woolston, who helps manage $2.3 billion at Boston Advisors. “That will aid corporate profits and therefore stock prices.”
But the market couldn’t hold on to most of its gains. Some analysts said the Energy Department’s report that U.S. crude inventories fell last week -- the third straight weekly decline -- triggered concern that oil prices might begin to head higher.
Near-term crude futures in New York rose 35 cents to $61.37 a barrel. Oil has rebounded from a recent low of $55.81 on Nov. 17.
The Organization of the Petroleum Exporting Countries, which last month cut production for the first time in two years, meets today in Nigeria to review policy. Consumer nations are worried that another reduction in supplies could ignite a surge in prices.
Still, stock prices were mostly in positive territory Wednesday.
The Standard & Poor’s 500 index was up 1.65 points, or 0.1%, to 1,413.21, nearing the six-year closing high of 1,414.76 set Dec. 5.
The technology-dominated Nasdaq composite added 0.81 of a point to 2,432.41.
Winners topped losers by a narrow margin on the New York Stock Exchange.
Stocks ended modestly lower Tuesday after the Federal Reserve kept its benchmark short-term interest rate unchanged at 5.25%, as expected.
But the Fed continued to warn that inflation concerns might compel it to tighten credit further. Policymakers next meet Jan. 31.
The November retail sales data provided more evidence that the economy overall was in decent shape despite trouble in the housing market, analysts said.
Treasury bond yields shot higher on the retail report. Bond yields have fallen in recent months on hopes that the Fed might begin cutting short-term rates in 2007. Upbeat data on the economy could dim those hopes.
The 10-year T-note yield jumped to a three-week high of 4.58% from 4.49% on Tuesday.
The retail report helped buoy the recently weak dollar. The euro fell to $1.32 from $1.328 on Tuesday. The dollar rose to 117.52 yen from 116.77.
Among the day’s market highlights:
* In the retail sector, J.C. Penney rallied $1.58 to $78.78, Nordstrom gained 72 cents to $49.84 and Limited Brands added 33 cents to $30.92.
* Energy stocks were mostly higher with oil prices. Exxon Mobil surged $1.11 to $77.36, Baker Hughes jumped $2.26 to $74.21 and Suncor Energy was up $1.21 to $79.70.
* Airline stocks continued to get a lift from takeover speculation. UAL, parent of United Air Lines, soared $2.01 to $45.24 and Continental rose $1.88 to $44.76 on reports that they were in merger talks. The companies declined to comment.
AirTran Holdings rose 50 cents to $12.85 and Midwest Air Group jumped $2.02 to $12.85 after AirTran bid $11.25 a share for Midwest. The target has rejected the offer.
* In the tech sector, Apple Computer rose $2.91 to $89.05. Brokerage Morgan Stanley said it expected Apple shares to reach $110 in the next 12 months, up from an earlier forecast of $90. The stock’s record closing high was $91.81 on Nov. 28.
* Dolby Laboratories jumped $1.76 to a record $32.10. The audio technology company’s shares began to surge early in November after the San Francisco-based firm reported a 50% jump in quarterly income. The stock was recommended last week by CNBC’s Jim Cramer.
* Amgen inched up 17 cents to $69.84. The Thousand Oaks-based biotech giant said its board authorized the buyback of as much as $5 billion of stock. The company, which has a stock market value of $81 billion, said it had $1.5 billion remaining under a previous buyback authorization.
Amgen shares are down 11% year to date. By contrast, an index of 20 major biotech shares is up 11% this year.
* Among new stock issues, Pasadena-based Guidance Software jumped to $15.18 on its first trading day from an initial offering price of $11.50. The company (ticker symbol: GUID), which develops programs that retrieve deleted computer data, had hoped to sell its shares for as much as $14.50 a share but had to reduce the price.
Also, fiber-optic laser maker IPG Photonics (IPGP) soared from $16.50 to $25.60 on its first day of trading.
Genesis Lease, an aircraft leasing firm, priced its new shares at $23 a share. They will begin trading today under the symbol GLS.
NewStar Financial, a lender to mid-size companies, went public at $17 a share. The stock will begin trading today under the symbol NEWS.
