Dow hits 11,120 after late surge
NEW YORK » Stocks posted moderate gains yesterday, buoyed by Hewlett-Packard Co.'s earnings, a surprising jump in home construction and more positive comments from the Federal Reserve. The Dow Jones industrial average posted a new 4 1/2-year high on a late surge in trading.
Hewlett-Packard's ongoing turnaround encouraged buying in the technology sector and helped the Dow reach its highest level since June 5, 2001, demonstrating Wall Street's confidence in large-cap stocks.
Investors' economic worries were eased as the news on home construction, which jumped 14.5 percent last month, followed a bullish economic outlook from new Federal Reserve Chairman Ben Bernanke.
"Clearly, the market has turned for the better here," said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. "You're seeing today some of the ebb and flow that's to be expected in a market like this, but with Bernanke saying the economy is still powering ahead, this is not a bad environment to be in."
However, with the major indexes posting substantial gains for the week, yesterday's trading was lackluster until the last half-hour of the session, when St. Louis Fed President William Poole said the Fed was close to stopping interest rate hikes.
The Dow rose 61.71, or 0.56 percent, to 11,120.68.
Broader stock indicators also posted modest gains. The Standard & Poor's 500 index rose 9.38, or 0.73 percent, to 1,289.38, and the tech-focused Nasdaq composite index added 18.20, or 0.8 percent, to 2,294.63.
Bonds were little changed, with the yield on the 10-year Treasury note falling to 4.59 percent from 4.60 percent late Wednesday. The dollar rose against most major currencies, while gold prices fell.
A jump in oil prices limited the stock market's gains. A barrel of light crude settled at $58.46, up 81 cents, on the New York Mercantile Exchange.
The recent drop in oil below $60 per barrel, combined with strong earnings and Bernanke's testimony, spurred this week's rally. However, some analysts question whether future uncertainties, such as slower economic growth or a reverse in oil prices, could keep stocks from building on their gains.
"Nobody wants to get ahead of things," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia. "The stuff that could happen later in the year could be creeping into things now, which is keeping us flatter than I would've liked."