Stocks Climb; Yields Ease
Wall Street closed out the week with modest gains Friday, although trading was erratic as signs of a cooling housing market conflicted with recent signals of economic strength and left no clear clue to the Federal Reserve’s longer-term plans for interest rates.
Key indexes of smaller stocks ended at all-time highs.
The latest report on the housing sector showed new-home sales plunging 10.5% in February, according to the Commerce Department. It was the biggest one-month drop in nine years.
A report on February durable goods orders also was weaker than many economists expected, excluding transportation orders.
But other data in recent weeks have pointed to continued strength in the economy.
The Fed meets Monday and Tuesday and is expected to raise the nation’s benchmark short-term rate by a quarter percentage point to 4.75%.
After that, however, “the economic data point to the Fed stopping [rate hikes] sooner rather than later, and that’s encouraging” for markets, said Jack Caffrey, equities strategist at JPMorgan Private Bank.
Other analysts aren’t so sure, but the bond market took Caffrey’s view on Friday, sending yields tumbling. The 10-year U.S. Treasury note yield fell to 4.67% from 4.74% Thursday. It was unchanged from a week ago.
On Wall Street, the Dow Jones industrial average added 9.68 points, or 0.1%, to 11,279.97.
Broader stock indicators were higher as well. The Standard & Poor’s 500 index gained 1.28 points, or 0.1%, to 1,302.95, and the Nasdaq composite climbed 12.67 points, or 0.6%, to 2,312.82.
Winners topped losers by 3 to 2 on the Big Board.
The market advanced despite another rise in oil prices. Near-term crude futures in New York were up 35 cents to $64.26 a barrel, the highest level in seven weeks.
Despite volatile trading and a new five-year high for the Dow on Wednesday, stocks finished the week mixed. The Dow was up less than 0.01% for the week, while the S&P; lost 0.3% and the Nasdaq added 0.3%.
The strongest sector on Friday was small-company stocks, which have led the market for most of the last six years. The Russell 2,000 small-stock index jumped 0.8% to a record high of 753.83. It is up 12% year to date.
By contrast, the Dow is up 5.2% and the S&P; 500 4.4%.
With the end of the first quarter looming, some money managers may be loading up on the sectors that have worked best so far this year, analysts say. That could explain the latest pop in smaller issues.
Among Friday’s highlights:
* Tim Hortons surged $5.01, or 22%, to $28.17 in the stock’s debut. The No. 1 Canadian doughnut chain had the biggest North American initial public offering in nine months. Wendy’s International, which owns about 83% of Tim Hortons, fell $2.08, or 3.2%, to $62.93.
Helped by Tim Hortons, Canada’s S&P;/TSX composite share index rose 0.8% to a record high. It is up 7.4% this year.
* Lucent shares jumped 24 cents, or 8.5%, to $3.06 and Alcatel gained 25 cents, or 1.6%, to $15.70 after the two telecom-equipment firms late Thursday confirmed that they were in merger talks.
Also in the sector, Tellabs soared $1.11 to $15.35, Ciena was up 34 cents to $5.15 and JDS Uniphase gained 11 cents to $4.03.
* Google soared $23.91 to $365.80. The most-used Internet search engine will replace Burlington Resources, an oil producer being sold to ConocoPhillips, in the S&P; 500 index March 31, S&P; said late Thursday.
Stock index funds must add Google to keep their portfolios in line with the index.
* Precious metals miners rallied as silver prices rose to fresh 22-year highs. Near-term silver futures gained 4.5 cents to $10.69 an ounce. Gold jumped $9.90 to $560 an ounce.
Agnico-Eagle rose $1.29 to $28.01 and Glamis Gold soared $1.44 to $29.36.
* The soft durable-goods data pressured some industrial companies, which have been rallying sharply in recent weeks. Caterpillar lost 76 cents to $75.50. But Reliance Steel jumped $1.89 to a record $89.33.
