Dow Ekes Out Another High
The Dow Jones industrial average inched its way to another record close Friday, marking the third straight weekly triple-digit increase in the blue-chip index.
The Dow spent much of a quiet session in the red following a strong surge Thursday in which it broke through 11,900 for the first time while setting a record close.
Stocks overall moved little Friday as traders were unimpressed with a profit report from General Electric and after brokerages issued negative comments about Home Depot.
Home builders, including Los Angeles-based KB Home, slumped amid concerns that their earnings would be hit by the housing slowdown.
Oil prices, which had fallen in recent weeks, rose Friday, holding the major stock indexes to modest gains.
“I think more than anything today we’re sort of consolidating yesterday’s gain,” Mike Malone, trading analyst at Cowen & Co, said of Friday’s trading.
The Dow rose 12.81 points, or 0.1%, to 11,960.51, passing the record close of 11,947.70 set Thursday as well as an intraday high of 11,959.62 reached Thursday.
Broader stock indicators also advanced. The Standard & Poor’s 500 index was up 2.79, or 0.2%, at 1,365.62 and the Nasdaq composite index was up 11.11, or 0.5%, at 2,357.29.
The Dow climbed 110.30 points, or 0.9%, for the week, while the S&P; 500 gained 1.2% and the Nasdaq rose 2.5%. The Dow had also shown triple-digit point gains in the preceding two weeks. Despite the overall gains in the market, the S&P; 500 stands about 10.6% below its high of 1,527.46 set in 2000. The Nasdaq is even further off, about 53% below its 2000 high of 5,048.62.
Bond yields rose after a private report showed that consumer sentiment was much stronger than expected in October, boosted by a sharp drop in gasoline prices. Bonds had slipped earlier in the day after a government report showed that retail sales, excluding gasoline, grew briskly in September.
The yield on the benchmark 10-year Treasury note climbed to 4.8% from 4.77% on Thursday.
Kim Rupert, managing director for global fixed income analysis at Action Economics, said the market was thinking that the Federal Reserve was going to keep interest rates steady, “probably through the first quarter of next year.”
The markets were caught off guard Friday by a 0.4% decline in September retail sales. The drop reported by the Commerce Department stemmed from a 9.3% decline in spending on gasoline. Spending increased in other areas, however.
Malone said he believed that the retail sales figure was positive because it showed that consumers spent elsewhere as gas prices retreated. “For all the talk of the death of the consumer, that is definitely not manifesting itself.”
Indeed, consumers have grown more upbeat as gas prices have fallen. The University of Michigan’s preliminary consumer sentiment figure was a stronger-than-expected 92.3 for October. That compares with a 85.4 reading for September.
Noman Ali, a portfolio manager for U.S. equities at MFC Global Investment Management, said investor enthusiasm in recent weeks was tied to expectations of strong profit reports and the notion that consumers would keep spending.
“Underlying consumer strength is still pretty strong. There’s really little to worry about in terms of the economy going into recession,” he said.
In other market highlights:
* Oil prices increased for a second day after Norway shut two offshore platforms as safety precautions and U.S. demand gained strength. Crude futures rose 71 cents in New York to $58.57 a barrel. Energy stocks rose along with the price of oil. Exxon Mobil advanced 75 cents to $68.40 and ConocoPhillips increased $1.22 to $60.03.
* Home builders declined on fears that the housing slowdown would crimp profits. KB Home fell to $44.63, down $2.80, or 5.9%, the largest decline in the S&P; 500. Pulte Homes, the biggest home builder by market value, fell $1.52 to $32.84. Centex fell $3.03 to $52.06 after it said its home-building revenue fell by half as sales dropped 6.9%.
* General Electric reported a 6% increase in its third-quarter profit to match Wall Street’s expectations and turned in better-than-expected revenue. GE fell 24 cents to $35.98 and held back the S&P; 500, which is weighted by market capitalization.
* Home Depot declined $1 to $36.90 after reports from several brokerages raised concerns about the nation’s largest home improvement chain. Home Depot, which like GE is one of the 30 stocks that make up the Dow, on Thursday announced plans to shake up its executive structure.
* CB Richard Ellis Group of Los Angeles fell 47 cents to $25.52 after its entry into the S&P; 500 was delayed. The real estate company is slated to replace BellSouth, which is being acquired by AT&T.; But the deal must be approved by the Federal Communications Commission, which postponed a vote set for Friday until next month.
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Bloomberg News and Reuters were used in compiling this report.
