Dow, S&P hit
new 2005 highs
NEW YORK » Investors cautiously bid stocks higher yesterday, pleased by growth in retail sales but wary about Federal Reserve Chairman Alan Greenspan's congressional testimony starting today. The Dow Jones industrials and Standard & Poor's 500 index reached new 2005 highs.
Wall Street welcomed the Commerce Department's report that overall retail sales fell 0.3 percent in January, less than the 0.5 percent economists expected. Taking sluggish auto sales out of the equation, retail sales rose 0.6 percent, also better than expected.
Some investors, however, remained hesitant before Greenspan's take on the economy and monetary policy, coming today and tomorrow on Capital Hill. While most on Wall Street expect Greenspan to reiterate the Fed's current stance, calling for measured interst rate hikes, some analysts believe the markets' recent gains may prompt Greenspan to sound a cautionary note.
"Greenspan has a history of using this meeting to try to curb the market," said Bill Groenveld, head trader for vFinance Investments. "I wouldn't be surprised if you end up seeing him making a statement that we weren't expecting. The way long-term rates are going, he may have to shake things up a bit."
The Dow rose 46.19, or 0.43 percent, to 10,837.32, it's best close since Dec. 28. The Dow is up 0.5 percent for the year.
Broader stock indicators were modestly higher. The S&P 500 was up 3.98, or 0.33 percent, at 1,210.12, a new year-to-date high, though the index is still down from 2004's finish.
The Nasdaq composite index gained 6.30, or 0.3 percent, at 2,089.21, but remained well off of its 2005 high. The Nasdaq and S&P 500 remain down for the year overall.
Volume was somewhat light because of concerns over Greenspan's testimony, but some analysts took comfort in the fact that the major indexes did not give back their gains over the past two weeks.
While the major indexes showed modest gains, merger news drove individual stocks.
Investors welcomed reports that a private investment firm has made an unsolicited bid for struggling electronics retailer Circuit City Stores Inc. Circuit City surged $2.30, or 16.2 percent, to $16.53 after Highfields Capital Management LP made a $3.25 billion bid for the retailer. The company's board said it will carefully evaluate the $17-per-share proposal.
Highfields said it wants to take Circuit City private in order to be more aggressive in making changes to improve the electronics chain.