Stocks rise on strong earnings reports
Wall Street was mixed Tuesday, recovering from an early loss as investors shrugged off disappointing housing and consumer confidence data to focus on stronger-than-expected quarterly earnings. The Dow Jones industrials set a new trading high, and resumed their trek toward 13,000.
The market picked up momentum in mid-afternoon. Investors seemed to lose some of the earlier caution they adopted after the National Association of Realtors reported sales of existing homes in March had their biggest one-month decline since January 1989. Also, the Conference Board reported consumer confidence fell more than expected in April due to higher gas prices and broader economic concerns.
Robust first-quarter earnings reports have been driving the market higher over the past week, allowing the Dow to approach 13,000, and there were more upbeat results cheering the market on Tuesday: from U.S. military contractor Lockheed Martin Corp., Dow industrials AT&T Inc. and Dupont Co., and chip maker Texas Instruments Inc.
“A general optimistic tone related to better-than-expected earnings is what’s moving it,” said Richard E. Cripps, chief market strategist for Stifel Nicolaus, a broker based in St. Louis. However, “it’s not a market that’s necessarily very broad in its advance.”
He pointed out that the Dow’s strong gains in afternoon trading were driven by only a few companies, notably International Business Machines Corp. and Honeywell International Inc., which both made dividend announcements. Also, there were much smaller moves in the broader Standard & Poor’s 500 and Nasdaq composite indexes — which so far this year have risen by greater percentages than the Dow.
The Dow rose 34.54, or 0.27 percent, to 12,953.94. The index set a new intraday high of 12,989.86, less than 11 points away from 13,000.
Broader markets were mixed. The S&P 500 index was down 0.52, or 0.03 percent, at 1,480.41, and the Nasdaq rose 0.87, or 0.03 percent, to 2,524.54.
The Nasdaq is slightly above the halfway point to its record close of 5,048.62, while the S&P is just 3 percent below its record close of 1,527.46. Both records were reached in March 2000, at the end of the dot-com boom.
“Where I think you’ll get a lot more excitement is when the S&P pushes past the 2,000 level. That’s going to be a real event,” Cripps said.
Investors weren’t buying with abandon: Declining issues outnumbered advancers Tuesday by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to 3.11 billion shares, up from Monday’s 2.56 billion.
“Everyone is remembering where we were a year ago, when we were all talking about Dow 12,000, and then the market ended up tanking in May,” said Matt Kelmon, portfolio manager of the Kelmoore Strategy Funds. “I think there’s just nervousness out there that this could again be the case, and there really isn’t a lot to propel the market with. You’ll see a new focus on data.”
Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.62 percent from 4.65 percent late Monday.
The dollar fell against other major currencies, with the euro close to its record high of $1.3667. Gold prices also fell.
Oil prices declined, with a barrel of light sweet crude down $1.30 at $64.59 on the New York Mercantile Exchange. There has been continued concerns about violence in Nigeria, a key oil producer, and the size of inventories of oil and gasoline in the U.S.
The Russell 2000 index of smaller companies was down 1.19, or 0.14 percent, at 826.36.
Overseas, Japan’s Nikkei stock average closed down 0.02 percent. At the close, Britain’s FTSE 100 was down 0.77 percent, Germany’s DAX index was down 0.89 percent, and France’s CAC-40 was down 0.53 percent.