Stocks Up on Retail, Job Data
Wall Street rose modestly but broadly Thursday, nudging the Dow Jones industrial average to its third straight record as investors welcomed upbeat retail sales and jobless claims figures.
Treasury bond yields edged up ahead of today’s September employment report.
The Dow added 16.08 points, or 0.1%, to close at 11,866.69, surpassing the previous record of 11,850.61 set Wednesday. The blue-chip index traded as high as 11,870.
Rising oil prices didn’t smother investors’ good mood.
“There’s a feeling that people don’t want to miss this rally, and they are hopping aboard,” said Michael Metz, chief investment strategist at Oppenheimer & Co.
Stocks pulled back briefly after Charles Plosser, the newly installed president of the Federal Reserve Bank of Philadelphia, said that further Fed interest rate hikes might be good for the economy’s long-term health.
But the market climbed further in the final three hours of trading.
Among broader stock indexes, the Standard & Poor’s 500 rose to a fresh 5 1/2 -year high, up 3 points, or 0.2%, to 1,353.22. The Nasdaq composite rallied 15.39 points, or 0.7%, to 2,306.34, topping 2,300 for the first time since mid-May.
The Russell 2,000 small-stock index jumped 1.3% after a 2.1% gain Wednesday. Smaller stocks have been playing catch-up after lagging behind blue chips in recent months.
Advancing issues led decliners by about 2 to 1 on the New York Stock Exchange.
The Dow on Tuesday finally closed above its peak of the last bull market, reached in January 2000. Analysts say the new high for the world’s best-known stock index has helped stoke fresh enthusiasm for equities, amid optimism that the economy will achieve a “soft landing” -- growth fast enough to keep corporate earnings rising but not so fast that it fuels higher inflation and higher interest rates.
The day’s economic news was stronger than expected, with retailers such as Target, Nordstrom and Limited Brands reporting that their same-store sales in September surpassed analysts’ forecasts. Also, the number of new unemployment claims last week dropped to the lowest level in 10 weeks.
Investors in the Treasury bond market showed some caution. In separate speeches, Plosser and Fed Vice Chairman Donald Kohn indicated that the central bank was in no rush to reduce interest rates.
Plosser said the Fed wouldn’t hesitate to raise rates again if inflation worsened. The central bank has held its key interest rate steady at 5.25% for the last two months.
Today’s September employment report will give a fresh picture of the economy’s health. Some traders sold bonds ahead of the report, pushing the 10-year Treasury note yield to 4.61% from 4.56% on Thursday.
In commodities trading, crude oil futures in New York added 62 cents to $60.03 a barrel on news reports that major oil exporters were considering production cuts.
In other market highlights:
* Wal-Mart Stores dropped $1.14 to $48.41 after the world’s largest retailer reported disappointing September sales. But rival discounter Target rose $1.05 to $58.68 after it reported a solid sales gain for the month and beat analyst estimates.
Also in the retail sector, Guess surged $3.77 to a record $53.90 and Ross Stores was up $1.93 to $28.88.
But Dillard’s tumbled $2.48, or 7.4%, to $31.15. The department store chain said same-store sales were unchanged in the five weeks ended Sept. 30.
* Caterpillar, the biggest maker of earthmoving equipment, jumped $2.70 to $68.24 for the top gain in the Dow average. The company was among 27 stocks highlighted by Merrill Lynch as showing resilience in the face of a slower economy.
Other heavy-industry shares up sharply included Cummins, up $8.26 to $129.79; Rockwell Automation, up $2.35 to $60.28; and Phelps Dodge, up $4.11 to $82.76.
* Steel stocks soared on renewed takeover speculation after India’s Tata Steel said it was looking at “a number of global opportunities.” U.S. Steel leapt $4.68 to $60.63; Reliance Steel rose $1.73 to $32.89.
* Some pharmacy chains dropped after Wal-Mart said it would expand a program of price cuts on some generic drugs to all 235 of its Florida locations today. Walgreen fell $1.49 to $43.39. CVS slid $1.22 to $30.93.
* Starbucks shot up $2.73 to $38.69 after saying same-store sales rose 6% in September on strong demand for pumpkin-spice lattes and lunch and breakfast sandwiches.
* 3Com gained 56 cents to $5.01 on speculation that the maker of computer-networking equipment might be bought by a private equity firm. A group may be prepared to pay $7 a share for the company, said Kaufman Bros. analyst Manuel Recarey. A 3Com spokesman declined to comment.
* Shares of private prison operators surged after Gov. Arnold Schwarzenegger authorized transfers to other public and private prisons to relieve overcrowding in the California prison system. Corrections Corp. of America jumped $3.51 to $47.08. Geo Group rallied $2.20 to $32.90.
