Stocks edge higher after overseas markets rebound
More signs that the economy is creeping toward recovery encouraged investors to move further into stocks -- but cautiously.
Stocks rose moderately Thursday in very light volume. A smattering of positive economic data convinced investors to take more chances on stocks. Financials were particularly in demand after a report quoted American International Group’s chief executive as saying the company would repay its bailout loans from the government.
News from the Federal Reserve Bank of Philadelphia of a pickup in mid-Atlantic manufacturing also lifted the market, having offset a weaker-than-expected Labor Department report on first-time jobless claims.
“I think the headline news just gave more comfort to those who have been and remain of the view that the recession is not only ending but that we are on the cusp of a V-shaped recovery,” said David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates.
The Dow Jones industrial average rose 70.89 points, or 0.8%, to 9,350.05. The Standard & Poor’s 500 index increased 10.91 points, or 1.1%, to 1,007.37, and the Nasdaq composite index gained 19.98 points, or 1.0%, to 1,989.22.
But there were signs of caution. The low volume, typical for an August day, meant that investors weren’t piling into the market and that price movements could be exaggerated.
Consolidated volume on the New York Stock Exchange came to 5 billion shares, up from 4.35 billion on Wednesday. Rising stocks outpaced falling stocks by about 3 to 1 on the NYSE.
In other market highlights:
* Treasury prices closed mixed, having regained some ground from earlier losses, another sign that investors are being careful. The yield on the benchmark 10-year note fell to 3.43% from 3.46% late Wednesday.
* The Russell 2,000 index of smaller companies rose 7.03 points, or 1.3%, to 568.68.
* The dollar was mixed against other major currencies, while gold prices fell.
* Crude oil rose 12 cents to $72.54 a barrel on the New York Mercantile Exchange.
