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Stocks post modest gains on rise in commodities
Source: Agencies |
November 18, 2009, Wednesday
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STOCKS finished an erratic session mixed yesterday as higher commodity prices lifted energy and materials shares.
The meager advances were enough to push stocks to new 13-month highs, though more shares fell than rose at the New York Stock Exchange. The market had zigzagged for much of the day on mixed news from retailers and on industrial production.
A rebound in the dollar after three down days kept investors' appetite for stocks in check. A long-term weakening trend in the dollar since March has been lifting commodities prices and shares of U.S. exporters, which benefit from stronger foreign demand for their goods when the dollar falls. Record-low U.S. interest rates have also driven investors to seek higher returns in stocks and commodities, pushing share prices higher.
Higher oil prices lifted energy stocks, and trading volume remained light.
Traders focused on retailers' earnings reports for insight into one of the market's biggest worries: how much consumers are spending. Home Depot Inc., Saks Inc. and Target Corp. all reported better-than-expected third-quarter results but also said they remain cautious ahead of the holiday shopping season.
"Despite the dramatic rally in the stock market, we still see the consumer operating at recessionary levels," said Uri Landesman, chief equity strategist and senior portfolio manager at ING Investment Management in New York.
Better retail news pushed stocks higher Monday as a government report showed a rebound in overall sales in October. Investors are looking for signs that consumer spending, one of the biggest drivers of the U.S. economy, will recover during the holiday season.
A report on industrial production weighed on the market. The Fed said output at the nation's factories, mines and utilities rose 0.1 percent in October, less than the 0.4 percent predicted by economists polled by Thomson Reuters.
Meanwhile, signs of inflation remained muted, a positive signal for the economy. The Labor Department's Producer Price Index, which measures inflation at the wholesale level, rose less than expected in October. The 0.3 percent rise was smaller than economists' forecasts of 0.5 percent and followed a decline of 0.6 percent a month earlier.
"The market is saying inflation is not an issue," said Tim Courtney, chief investment officer at Oklahoma City-based Burns Advisory Group. He said that's a signal interest rates will remain low.
The Dow Jones industrial average rose 30.46, or 0.3 percent, to 10,437.42. It was the highest close for the Dow since Oct. 2, 2008, when it ended at 10,482.85.
The broader Standard & Poor's 500 index rose 1.02, or 0.1 percent, to 1,110.32, while the Nasdaq composite index rose 5.93, or 0.3 percent, to 2,203.78.
Falling stocks narrowly outpaced those that rose on the NYSE, where volume came to 972 million shares compared with 1.1 billion Monday.
Stocks jumped Monday on the bigger-than-expected rebound in retail sales in October. The Dow rose 136 points and the S&P closed above the 1,100 level for the first time in more than a year.
The Dow is up 725 points, or 7.5 percent, this month. That has some analysts saying the market has been rising too fast given problems like unemployment still facing the economy. For the year, the Dow is up 18.9 percent after rebounding from a 12-year low in March.
A bounce in crude helped energy stocks for a second day yesterday. Crude oil rose 24 cents to settle at US$79.14 per barrel on the New York Mercantile Exchange.
Gold climbed 20 cents to US$1,139.40. Gains in other metals fanned gains of materials companies. Platinum jumped US$17.90 to US$1,459 an ounce.
Bond prices edged higher to push yields lower. The yield on the benchmark 10-year Treasury note slipped to 3.33 percent from 3.34 percent late Monday.
Home Depot fell 66 cents, or 2.4 percent, to US$26.99, while Saks rose 26 cents, or 4.1 percent, to US$5.67. Target fell US$1.52, or 3 percent, to US$48.77. Pacific Sunwear of California Inc. tumbled US$1.13, or 22.6 percent, to US$3.88 after its sales forecast fell short of expectations.
Meanwhile, Jacobs Engineering Inc. fell US$6.61, or 14.5 percent, to US$38.88 after the company's fourth-quarter earnings slid 31 percent and the company's forecast fell short of expectations.
The Russell 2000 index of smaller companies slipped 0.53, or 0.1 percent, to 602.34.
The meager advances were enough to push stocks to new 13-month highs, though more shares fell than rose at the New York Stock Exchange. The market had zigzagged for much of the day on mixed news from retailers and on industrial production.
A rebound in the dollar after three down days kept investors' appetite for stocks in check. A long-term weakening trend in the dollar since March has been lifting commodities prices and shares of U.S. exporters, which benefit from stronger foreign demand for their goods when the dollar falls. Record-low U.S. interest rates have also driven investors to seek higher returns in stocks and commodities, pushing share prices higher.
Higher oil prices lifted energy stocks, and trading volume remained light.
Traders focused on retailers' earnings reports for insight into one of the market's biggest worries: how much consumers are spending. Home Depot Inc., Saks Inc. and Target Corp. all reported better-than-expected third-quarter results but also said they remain cautious ahead of the holiday shopping season.
"Despite the dramatic rally in the stock market, we still see the consumer operating at recessionary levels," said Uri Landesman, chief equity strategist and senior portfolio manager at ING Investment Management in New York.
Better retail news pushed stocks higher Monday as a government report showed a rebound in overall sales in October. Investors are looking for signs that consumer spending, one of the biggest drivers of the U.S. economy, will recover during the holiday season.
A report on industrial production weighed on the market. The Fed said output at the nation's factories, mines and utilities rose 0.1 percent in October, less than the 0.4 percent predicted by economists polled by Thomson Reuters.
Meanwhile, signs of inflation remained muted, a positive signal for the economy. The Labor Department's Producer Price Index, which measures inflation at the wholesale level, rose less than expected in October. The 0.3 percent rise was smaller than economists' forecasts of 0.5 percent and followed a decline of 0.6 percent a month earlier.
"The market is saying inflation is not an issue," said Tim Courtney, chief investment officer at Oklahoma City-based Burns Advisory Group. He said that's a signal interest rates will remain low.
The Dow Jones industrial average rose 30.46, or 0.3 percent, to 10,437.42. It was the highest close for the Dow since Oct. 2, 2008, when it ended at 10,482.85.
The broader Standard & Poor's 500 index rose 1.02, or 0.1 percent, to 1,110.32, while the Nasdaq composite index rose 5.93, or 0.3 percent, to 2,203.78.
Falling stocks narrowly outpaced those that rose on the NYSE, where volume came to 972 million shares compared with 1.1 billion Monday.
Stocks jumped Monday on the bigger-than-expected rebound in retail sales in October. The Dow rose 136 points and the S&P closed above the 1,100 level for the first time in more than a year.
The Dow is up 725 points, or 7.5 percent, this month. That has some analysts saying the market has been rising too fast given problems like unemployment still facing the economy. For the year, the Dow is up 18.9 percent after rebounding from a 12-year low in March.
A bounce in crude helped energy stocks for a second day yesterday. Crude oil rose 24 cents to settle at US$79.14 per barrel on the New York Mercantile Exchange.
Gold climbed 20 cents to US$1,139.40. Gains in other metals fanned gains of materials companies. Platinum jumped US$17.90 to US$1,459 an ounce.
Bond prices edged higher to push yields lower. The yield on the benchmark 10-year Treasury note slipped to 3.33 percent from 3.34 percent late Monday.
Home Depot fell 66 cents, or 2.4 percent, to US$26.99, while Saks rose 26 cents, or 4.1 percent, to US$5.67. Target fell US$1.52, or 3 percent, to US$48.77. Pacific Sunwear of California Inc. tumbled US$1.13, or 22.6 percent, to US$3.88 after its sales forecast fell short of expectations.
Meanwhile, Jacobs Engineering Inc. fell US$6.61, or 14.5 percent, to US$38.88 after the company's fourth-quarter earnings slid 31 percent and the company's forecast fell short of expectations.
The Russell 2000 index of smaller companies slipped 0.53, or 0.1 percent, to 602.34.
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