Wall Street extends Dow, S&P; gains to a third day
Government plans to bolster consumer lending sent most stocks up Tuesday after a huge two-day rally, giving the Dow Jones industrials and the Standard & Poor’s 500 index their first triple-session advances in more than two months.
Tech stocks lagged behind the market, sending the Nasdaq composite index lower, as investors bet that businesses would continue to slash capital spending in a recession.
Some selling was widely expected after a rally Friday and Monday sent the Dow up nearly 900 points, but the fact that the market held steady -- in contrast to its behavior after other rallies this year -- suggested that investors might be regaining some confidence.
Still, it’s probably premature to say the market has hit its lowest level of the 13-month bear market, said Richard E. Cripps, chief market strategist for Stifel, Nicolaus & Co.
“This bottoming phase is going to be a process,” he said.
Many analysts thought the market had reached a bottom weeks ago after the devastating losses of early October, only to see Wall Street take an even sharper dive just last week.
Investors were encouraged Tuesday after the Federal Reserve said it planned to provide $800 billion to help unfreeze the market for consumer debt and to make mortgage loans cheaper and more available.
“We’re getting more clarity about the federal assistance across the board, and I think that’s being well received,” said Arthur Hogan, chief market analyst at Jefferies & Co.
The Dow rose 36.08 points, or 0.4%, to 8,479.47. The Dow last put a three-day advance together Aug. 26-28.
Broader indexes were mixed. The S&P; 500 rose 5.58 points, or 0.7%, to 857.39, giving the index its first three-day rise since Sept. 10-12.
The Nasdaq fell 7.29 points, or 0.5%, to 1,464.73. Still, advancing issues outnumbered decliners on Nasdaq by 5 to 4.
On the New York Stock Exchange, advancers were ahead by more than 2 to 1.
The government’s latest effort to combat the fear hobbling the marketplace overshadowed a report that the nation’s overall economic output shrank in the July-September quarter faster than initially estimated as consumers slashed spending by the most in 28 years.
The Commerce Department said third-quarter gross domestic product declined at a 0.5% annual rate, outpacing the 0.3% first estimated a month ago, but Wall Street had expected such a downward revision. It was the worst reading since the economy shrank at a 1.4% pace in the third quarter of 2001 during the last recession.
And there was some unexpected good news about consumers before the start of the holiday shopping season. The Conference Board said its consumer confidence index rose to 44.9 this month from a revised 38.8 in October. Last month’s reading was the lowest since the research group started compiling the index in 1967. Economists had expected a decline to 37.9.
The business research group said Americans’ views on the economy remained the gloomiest in decades. Consumer spending, always a concern on the Street, has taken on greater importance because the economy cannot expand unless consumers are spending -- and they’ve shown increasing reluctance in the last few months, a troubling sign with the holiday season approaching.
Other market highlights:
* Pasadena-based Jacobs Engineering Group rose $3.87, or 12%, to $37.44 on optimism that a government stimulus package would increase demand for its work on highway and energy projects.
* Overseas, key stock indexes rose 5.2% in Japan, 0.4% in Britain, 0.1% in Germany and 1.2% in France.