Stocks rise on economic news
Stocks managed a moderate advance Thursday, staying afloat as signs of strength in corporate takeover activity, jobs and overseas markets allowed investors to stomach a sharp rise in wholesale inflation.
Wall Street still displayed nervousness, however, selling off briefly after former Federal Reserve Chairman Alan Greenspan rekindled investors’ woes about subprime mortgages. The knee-jerk dip was illustrative of how jittery the markets are now, recoiling when reminded that no one yet knows the extent to which weak areas of economy, notably the struggling housing market and hemorrhaging subprime lenders, will hurt overall growth in the months ahead.
Trading was erratic at other points in the session, but most investors on Thursday chose to pick up bargains following a 242-point drop in the Dow Jones industrials on Tuesday and a 57-point recovery on Wednesday that suggested the market is holding above the index’s 12,000 mark — at least for now.
“There’s some optimism because the market had fallen quite a bit and it showed resilience yesterday, which is encouraging,” Ed Peters, chief investment officer at PanAgora Asset Management Inc. in Boston, adding that the sentiment could shift on the Consumer Price Index’s release Friday. “Some days the pessimists win, some days the optimists win. The market goes back and forth.”
A bidding battle for commodities exchange CBOT Holdings Inc. also gave stocks a lift. Despite the cooling economy, merger and acquisition activity has been surging, leading some investors to believe that problems in some sectors haven’t seeped into the stronger areas of the economy.
The Dow rose 26.28, or 0.22 percent, to 12,159.68. The Dow is 627 points below its closing high of 12,786.64, reached Feb. 20.
Broader stock indicators were also higher. The Standard & Poor’s 500 index gained 5.11, or 0.37 percent, to 1,392.28, and the Nasdaq composite index advanced 6.96, or 0.29 percent, to 2,378.70.
Bonds were little changed. The yield on the benchmark 10-year Treasury note was at 4.54 percent, the same as late Wednesday.
The dollar was mixed against other major currencies, and gold prices rose.
Stocks briefly retreated after Greenspan said at a conference in Boca Raton, Fla., that mortgage lenders’ troubles are not yet spilling into the broader economy, but they could if home prices see another substantial decline.
Markets also appeared confident that the job market is holding steady. The Labor Department Thursday said the number of Americans seeking unemployment benefits fell for the second straight week. Analysts note, however, that the data can swing drastically from week to week.
Asian and European markets advanced. Japan’s Nikkei stock average rose 1.10 percent. Britain’s FTSE 100 gained 2.21 percent, Germany’s DAX index added 2.14 percent, and France’s CAC-40 advanced 1.77 percent.
Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where consolidated volume came to 2.73 billion shares, down from 3.72 billion shares Wednesday.
The Russell 2000 index of smaller companies rose 7.93, or 1.02 percent, at 783.61.
Oil prices fell 61 cents to $57.55 a barrel on the New York Mercantile Exchange.