Exuberant Dow climbs 103
Stocks shot up Wednesday as investors shrugged off a mixed reading on the housing sector and instead focused on higher industrial output, lower oil prices and the perception that smart money was pouring into the market.
The Dow Jones industrials marked their 23rd record close of the year.
Share prices initially slipped after Commerce Department data showed a plunge in applications for building permits last month. But they recovered after oil prices fell and the Federal Reserve reported that industrial output rose more than expected in April.
News that billionaires Warren E. Buffett, Edward Lampert and Carl Icahn were upping equity investments also gave investors confidence that stocks had further to climb, even though the Dow has risen more than 1,300 points in the last two months.
“We seem to be in a period of time where it doesn’t make a difference what the news is -- the market seems to find a reason to go up,” said Ron Kiddoo, chief investment officer at Cozad Asset Management. “How long will this last? It’s anybody’s guess.”
The Dow surged 103.69 points, or 0.8%, to 13,487.53. It also hit a new trading high, 13,489.57. The Standard & Poor’s 500 index gained 12.95 points, or 0.8%, to 1,514.14, and the Nasdaq composite index rose 22.13 points, or 0.9%, to 2,547.42.
The Russell 2,000 index of smaller-company stocks rose 6.02 points, or 0.7%, to 820.20.
Advancing issues outnumbered decliners by about 5 to 3 on the New York Stock Exchange.
Yields on short-term Treasury bills tumbled, pushing the three-month bill yield to 4.73%, a one-year low, from 4.81% on Tuesday. U.S. tax revenue has exceeded forecasts, raising expectations the Treasury will cut back the size of T-bill auctions.
Long-term bonds showed little change despite the economic readings. The yield on the benchmark 10-year Treasury note rose to 4.71% from 4.70% late Tuesday.
The dollar was mostly higher against other major currencies, while gold prices declined.
A rebound in U.S. oil and gasoline inventories sent crude prices down. Oil futures fell 62 cents to $62.55 a barrel in New York.
Wall Street lives by economic news but it also has the ability to look past it. In a potentially worrisome sign, requests for new construction permits fell 8.9% in April, the biggest drop since a 24% plunge in February 1990. But investors were pleased to see that the seasonally adjusted rate of home and apartment construction rose 2.5% in April from March.
“It seems like the market has taken a lot of the news positively this year, whereas last year investors might have reacted negatively,” said Paul Alan Davis, a portfolio manager at Charles Schwab Investment Management Inc.
Citigroup, one of the Dow 30, rose $2.12, or 4%, to $54.91 after Lampert, a hedge fund manager, said he’d acquired more than 15 million shares of the financial services conglomerate.
Buffett’s Berkshire Hathaway, meanwhile, reported in a regulatory filing that it had doubled its stake in Dow component Johnson & Johnson, whose shares rose $1.23, or 2%, to $63.05.
Railroad stocks gained after Berkshire said it owned stakes in Union Pacific and Norfolk Southern. The Dow transportation average climbed 1.7%.
Union Pacific, the largest U.S. railroad, gained $1.10 to $119.39. Norfolk Southern, No. 4, added 92 cents, or 1.7%, to $56.79.
Icahn’s investment firm disclosed a 3.1-million-share stake in oil and gas producer Anadarko Petroleum and a 2.7-million-share stake in railroad CSX. Anadarko rose 73 cents to $47.20, and CSX rose 66 cents to $46.40.
In other market highlights:
* Lower oil prices lifted airline stocks. United Airlines parent UAL advanced $1.32, or 4%, to $34.62. Continental Airlines rose $1.48, or 4%, to $37.83. American Airlines parent AMR gained $1.28, or 5%, to $26.66.
* Computer Sciences rose $1.40, or 2.5%, to $57.52 on renewed takeover rumors. The El Segundo-based tech service firm said a year ago that it had received “expressions of interest,” but nothing came of them.
* Los Angeles-based Aecom Technology soared $1.94, or 9.2%, to $22.94. The engineering firm, which went public last week, got a boost from favorable remarks by CNBC’s Jim Cramer.
* U.S.-traded shares of Sony gained $3.15, or 6%, to $55.85. Sony said profit would more than double this year, citing solid sales of Bravia TVs and narrower losses in its PlayStation unit.
* Dell jumped $1.25, or 5.1%, to $25.92 on word that the company would begin selling its computers in retail stores in the U.S. and overseas over the next several quarters.
* Eye-care company Bausch & Lomb said it agreed to be acquired by a private equity firm for $65 a share, or $3.67 billion. The stock surged $6, or 9.8%, to $67.50, suggesting shareholders expected a higher bid.
* Overseas, key indexes fell 0.1% in Britain, 0.3% in Germany and 0.5% in France, while Japan’s main gauge rose 0.1%.
