Upbeat Data Boost Stocks
Upbeat economic data lifted stocks for a fourth day Wednesday, pushing the Standard & Poor’s 500 index past 1,300 for the first time since May 2001.
The industrial, materials and transportation sectors led the market higher, allowing the S&P; 500 to finally pop above 1,298, a level it had not been able to surpass in recent weeks.
“From a technician’s point of view, breaking through 1,300 was an important factor,” said Tobias Levkovich, chief U.S. equities strategist at Citigroup.
Stocks made little progress early in the day but rallied after the Federal Reserve’s “beige book,” a compilation of reports from the Fed’s 12 district banks, said economic activity nationwide continued to expand in January and February. Most of the Fed district banks characterized the pace of expansion as “moderate or steady.”
The S&P; 500 ended the day at 1,303.02, up 5.54 points, or 0.4%.
The Dow Jones industrial average gained 58.43 points, or 0.5%, to 11,209.77, its highest close since it reached 11,257.24 on May 22, 2001.
The Nasdaq composite rallied 15.94 points, or 0.7%, to 2,311.84, nearing the five-year high of 2,331.36 reached Jan. 11.
Winners topped losers by almost 2 to 1 on the New York Stock Exchange. The NYSE composite index closed at a record high, as did the Russell 2,000 index of smaller stocks, which was up 0.9% for the day.
Stocks advanced despite a rebound in Treasury bond yields.
Those yields had tumbled Tuesday after the government reported that retail sales fell in February. But the bond rally couldn’t stick Wednesday.
The 10-year T-note ended at 4.73%, up from 4.69%. The yield reached a 21-month high of 4.77% on Monday.
Bond yields have been rising in the U.S., Europe and Japan in recent weeks amid more signs of strength in the global economy.
On Wall Street, the economy’s resilience is being viewed as good for stocks. The Dow is up 4.6% year to date, the S&P; 500 is up 4.4%, the Nasdaq composite is up 4.8% and the Russell 2,000 is up 10.4%.
In other trading Wednesday, crude oil futures fell 93 cents to $62.17 a barrel in New York.
Among the day’s highlights:
* Chemical maker DuPont helped lead a rally in industrial issues whose fortunes are tied to the economy’s swings. The stock rose 95 cents to $42.87 after the company boosted its first-quarter profit forecast and said it would cut 1,500 jobs and close plants in Europe that make paints for cars.
First-quarter earnings will be 80 cents a share, excluding some costs, up from an earlier estimate of 70 cents, DuPont said. It cited “improved operating performance” in many of its units.
Among other industrial names, Reliance Steel gained $1.70 to $85.75, Cummins jumped $2.17 to $108.17 and Caterpillar surged $2.35 to $74.29.
* Vulcan Materials soared $5.59 to $85 after the construction products maker boosted its 2006 earnings forecast to as much as $4.50 a share, up from a previous estimate of as much as $4.15. The company cited higher prices and stronger shipments for all of its major product lines.
Also in the basic-materials sector, Eagle Materials jumped $4.85 to $58.65 and Cemex gained $2.90 to $63.60.
* Union Pacific rose $5.04 to a record $90.25. The company raised its per-share earnings forecast for the first quarter by more than 20%, citing increased shipping volume and better operating margins.
The outlook helped send a measure of S&P; 500 railroad stocks up 5.7%. The index is up 16% this year as railroads benefit from shipping commodities such as coal. Burlington Northern Santa Fe jumped $4.80 to $81.30; CSX gained $3.01 to $59.56.
* Sears Holdings rallied $15.02, or 13%, to $132.29 for the top performance in the S&P; 500 and biggest gain since March 2005. The largest U.S. department-store company said fourth-quarter profit was $4.03 a share on lower costs and a revival in sales at its Kmart stores.
The average of estimate of five analysts surveyed by Thomson Financial had been $3.62.
* Lehman Bros. Holdings lost $1.15 to $144.15 even after reporting fourth-quarter earnings of $1.09 billion, the best quarterly profit in the brokerage’s 156-year history. The results failed to satisfy some investors, who have bid the shares up 12% this year.
* CVS declined 86 cents to $29.71. The Securities and Exchange Commission started an informal inquiry into how the drugstore chain accounted for a barter transaction in 2000. The company’s audit committee determined the transaction’s accounting was incorrect, CVS said in an SEC filing.
* General Motors added 36 cents to $21.50. A group led by Kohlberg Kravis Roberts & Co. and some banks offered as much as $13 billion to buy a majority stake in General Motors Acceptance Corp., GM’s financing arm, the Wall Street Journal reported. KKR and GM executives declined to comment.
* PMC-Sierra gained 77 cents to $12.09 after the maker of chips for telecommunications equipment was raised to “buy” from “neutral” by a UBS analyst.
* McClatchy fell 45 cents to $50.72, its ninth decline in 10 sessions. The newspaper company Monday agreed to buy rival Knight Ridder for $4.5 billion. Knight Ridder fell 23 cents to $63.99.
