Optimism carries blue chips to new high

NEW YORK – Wall Street extended its October rally Monday as investors grew more confident about coming earnings reports and as a decline in oil bolstered hopes for higher consumer spending. The Dow Jones industrials crossed 12,100 for the first time and reached a record-high close.

Dow component Wal-Mart Stores Inc., which pleased investors by announcing plans to cut capital spending to improve profits, helped the blue chips to their new high. The Dow’s record came just three trading days after its first move past 12,000.

Strength from International Business Machines Corp., Hasbro Inc. and Xerox Corp. also fed the advance. Just halfway through the third-quarter earnings season, companies’ generally upbeat reports have given investors a renewed sense of security about the future.

“The blue chips have absolutely outperformed most markets, and this was an extension of that trend,” said Steven Goldman, chief market strategist at Weeden & Co. “I don’t think things are overdone. Investors are looking ahead thinking an economic slowdown is forthcoming, and it’s safer to get into household names and not new companies.”

Blue chips resumed a three-month rally Monday after stalling Friday; the Dow had already risen 233 points in October before Monday’s trading. The average also reached a new trading high Monday of 12,125.16.

The Dow Jones industrial average rose 114.54, or 0.95 percent, to 12,116.91.

With investors favoring blue chips, analysts appeared satisfied that the market wasn’t getting ahead of itself. The advance in the broader market was still narrow, and Goldman said he expects any future selloffs will be restrained to less than a few percent.

The Standard & Poor’s 500 index rose 8.42, or 0.62 percent, to 1,377.02, and the Nasdaq composite index rose 13.26, or 0.57 percent, to 2,355.56.

Monday’s gains came despite some concerns about the Federal Reserve’s two-day meeting on interest rates, which starts today. Policymakers are expected to leave interest rates unchanged, though they could sound a hawkish tone in their accompanying economic assessment because of recent signs of rising inflation.

Treasury bonds fell on speculation the Fed will keep its benchmark rate at 5.25 percent, which is still at its highest level in more than five years. Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.83 percent form 4.79 percent on Friday.

The dollar was mixed against other major currencies, while gold prices fell.

The price of oil, which fell to lows for the year Friday from its mid-July highs, is making investors more bullish on sectors like retail, which will benefit if consumers have more spending money. Doubts that OPEC members would follow Saudi Arabia’s lead to curb output pushed a barrel of light sweet crude lower by 52 cents to $58.81 on the New York Mercantile Exchange.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 1.54 billion shares.

The Russell 2000 index of smaller companies rose 1.39, or 0.18 percent, to 763.52.

Overseas, Japan’s Nikkei stock average closed up 0.82 percent. Britain’s FTSE 100 closed up 0.18 percent, Germany’s DAX index rose 0.65 percent, and France’s CAC-40 advanced 0.68 percent.