Stocks maintain rally with a modest gain
Wall Street ended mostly higher Friday in a modest advance that built on Thursday’s powerful rally.
Major indexes finished the week at all-time highs, despite another jump in oil prices.
Depressed home builders’ stocks got a lift on rumors that billionaire investor Warren Buffett might buy a stake in Hovnanian Enterprises.
The Dow Jones industrial average gained 45.52 points, or 0.3%, to a record 13,907.25. It is up 11.6% year to date.
The broader Standard & Poor’s 500 also closed at a record, adding 4.80 points, or 0.3%, to 1,552.50.
The Dow had rocketed 283 points, or 2.1%, on Thursday, the biggest percentage gain since October 2003. A key catalyst: June sales reports from major retailers that in many cases were better than expected -- damping concern that the housing market’s woes would trigger a steep decline in consumer spending.
On Friday, the news wasn’t as upbeat. The government’s report on overall retail sales in June showed a decline of 0.9%, the largest since August 2005. Sales were weak even excluding autos.
Still, Wall Street is refusing to give up faith in a continuing U.S. economic expansion. Many investors believe that economic strength abroad will help bolster domestic growth.
General Electric, one of the largest multinational companies, helped to stoke optimism about the economy on Friday. The company said its operating earnings rose 12% in the second quarter on a 12% jump in sales.
GE shares, which are in the Dow index, rose 50 cents to $39.50, the highest since 2002.
The broader market wasn’t as strong as blue chips. Winners had a narrow edge over losers on the New York Stock Exchange. The Russell 2,000 small stock index closed at a record high, but it inched up just 0.1%.
The Nasdaq composite gained 5.27 points, or 0.2%, to 2,707.00.
Rising oil prices may have given some investors second thoughts. Near-term crude futures in New York jumped $1.43 to $73.93 a barrel, the highest since August, after a pipeline shutdown and maintenance work reduced production of Brent oil in the North Sea.
Oil prices are approaching their all-time high of $77.03 a barrel reached a year ago.
In other trading, Treasury bond yields eased on the retail sales news. The 10-year T-note finished at 5.10%, down from 5.13% on Thursday.
For the week, the Dow rose 2.2%, the S&P; 500 was up 1.4% and Nasdaq advanced 1.5%. The next big test for the market: the barrage of second-quarter earnings reports coming next week.
Among Friday’s market highlights:
* Builders’ stocks soared on speculation that Buffett’s Berkshire Hathaway may buy shares in Hovnanian. The New Jersey-based builder’s stock rocketed $1.98, or 12%, to $18.53.
Buffett’s assistant, Debbie Bosanek, declined to comment. Hovnanian spokesman Doug Fenichel wouldn’t immediately comment.
Among other builders, KB Home jumped $1.24 to $37.43, Centex rose $2.05 to $43.67 and Lennar was up $1.26 to $36.40.
* Alcoa gave the Dow a boost. The stock jumped $2.06 to $47.35 on continuing speculation that the company may attract a takeover bid, now that it has dropped its attempt to buy rival Alcan.
* Thousand Oaks-based Amgen added 98 cents to $56.93. The biotech giant late Thursday said its board approved a $5-billion stock buyback plan. The company said it had $1.5 billion remaining on a previous buyback authorization. The stock is down 17% this year.
* Energy-related stocks were mostly higher, but Baker Hughes sank $5.13 to $84. The world’s third-largest oilfield-services provider estimated that profit excluding some items was $1.07 to $1.09 a share in the second quarter, missing the average analyst estimate of $1.19 in a Bloomberg survey. A slowdown in natural-gas drilling in Canada was partly to blame, the company said.
