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Investors buy bargains
NEW YORK >> A stronger-than-expected report on housing construction soothed Wall Street today and gave investors an incentive to pick up some bargains after four days of declines. A bullish outlook from General Electric Co. added to the gains.
"You had the record housing numbers, which were encouraging," said John Caldwell, chief equity strategist for McDonald Financial Group. "After several days of declines you have some buyers stepping in.
"The market is a little bit extended, so we're not looking for major moves in either direction," he added. "This market can hopefully tread water through the end of the year."
Declining issues narrowly outnumbered advancers on the New York Stock Exchange. Consolidated volume was light at 1.73 billion shares, but slightly more than the 1.71 billion shares traded Tuesday.
The Dow Jones industrial average closed up 66.30, or 0.7 percent, at 9,690.46, after a four-day loss of nearly 225 points.
The broader market also finished higher. The Nasdaq composite index gained 17.90, or 1 percent, to 1,899.65. The Standard & Poor's 500 index rose 8.29, or 0.8 percent, to 1,042.44. The Russell 2000 index rose 3.94, or 0.8 percent, to 525.62.
The price of the Treasury's 10-year note closed down 25/32 point, while its yield rose to 4.24 percent from 4.14 percent Tuesday. Two-year Treasury notes were down 3/16 point and yielded 1.87 percent, up from 1.77 percent Tuesday.
General Electric rose $1.03 to $29.47 after the company said it will likely increase its quarterly dividend by a penny to 20 cents a share next year, citing in part optimism about an improving economy.
The Commerce Department reported today that housing construction rose in October to 1.96 million units at a seasonally adjusted annual rate, representing a 2.9 percent increase from September. It was the highest level of activity seen in 17 years and beat analysts' estimates.
Stocks have ratcheted up and down in recent weeks as investors, having sent the market higher since mid-March, wonder if share prices might be a bit high. Analysts say the market might not have strength to advance significantly in the absence of surprisingly good economic news.
"When you look at valuations, it's one of the concerning factors that can limit gains over the course of 2004," Caldwell said.
Michael Palazzi, managing director of equity trading at SG Cowen Securities, agreed.
"We've seen the market consolidate over the last four trading days. The market has been very defensive," he said. "What kicked it out of the trend was one, a slightly oversold condition, and two, the announcement by General Electric saying the economy will pick up. It's definitely a market leader."
SoundView Technology Group Inc. gained $2.16 to $15.41 after Charles Schwab Corp. said it would acquire the research and investment banking firm in a deal worth about $324 million in cash. Schwab fell 8 cents to $11.34.
Analog Devices Inc. climbed $1.70 to $46.59 after the chipmaker said quarterly profit more than doubled and beat Wall Street's forecasts.
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