Stocks extended their rally with modest gains yesterday, as Wall Street overlooked climbing oil prices to focus on strong results from Lehman Brothers and Sprint's $35 billion...
NEW YORK Stocks extended their rally with modest gains yesterday, as Wall Street overlooked climbing oil prices to focus on strong results from Lehman Brothers and Sprint’s $35 billion deal to acquire Nextel Communications.
The Dow Jones industrial average gained 15.00 to 10,691.45, just 46 points shy of its high for the year.
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Microsoft, one of the 30 Dow stocks, shed 12 cents to close at $27.11 a share. Boeing, also a Dow stock, retreated 24 cents The broader gauges also rose, besting multiyear highs reached in the previous session. The S&P 500 added 2.34 to 1,205.72. The Nasdaq composite index rose 2.71 to 2,162.55.
Bullish corporate news has helped the Standard & Poor’s 500 and the Nasdaq composite index stretch to their highest levels since the summer of 2001 this week, but the three-day rally appeared to stagger yesterday as stocks drifted in and out of negative range. Analysts said the lack of strong selling pressure was a positive signal, though.
“The markets are a little bit flat, it’s nothing rip-roaring. Normally when you get to a significant trading level … there’s a natural inclination to take profits,” said Brian Pears, head equity trader at Victory Capital Management in Cleveland. “The fact that we’re still higher speaks to the strength of the underlying bullish trend.”
In Washington, President Bush offered assurances that his administration was working with Congress to reduce the nation’s budget and trade deficits, and said he supports “a strong-dollar policy.”
The U.S. government has done little to support the greenback, however, which continued to weaken against the euro yesterday. Some economists say this is by design; a weak dollar should help make U.S. goods more competitive in foreign markets and could curb domestic demand for imports.
Bonds rose, pushing yields lower, a day after the Federal Reserve raised short-term interest rates and suggested inflation remains in check. At least some of the strength in stocks was attributed to declining yields on the 10-year note, which slipped to 4.07 percent.
“It looks like the 10-year is really dictating how people are moving money around,” said Mark Donahoe, managing director at US Bancorp Piper Jaffray in Minneapolis. “I’m a little surprised there wasn’t more of a sell-off (in stocks). … But with the long bond closer to 4 percent, what’s your alternative? Stocks.”