Closing Market Report
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Rally continues ahead of economic reports
By Tim Paradis
Associated Press
NEW YORK » Stocks rallied for a second session yesterday, pushing to four-month highs even as oil prices showed a slight rebound after seven days of losses.
Although oil prices rose 21 cents to $63.97 a barrel on the New York Mercantile Exchange after the Department of Energy reported crude inventories fell more than expected last week, investors remained optimistic that the recent drop in oil would boost consumer spending and corporate profits.
Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors, said he was encouraged by a rise in technology stocks as well as small-company stocks in recent days.
"Those are signs from the stock market that investors are willing to take more risk," he said.
The Dow rose 45.23, or 0.39 percent, to 11,543.32, reaching a new four-month high. The gains follow a more than 100-point rise in the blue chips Tuesday based in part on optimism about oil prices and consumer spending.
Broader stock indicators also hit four-month highs. The Standard & Poor's 500 index rose 4.96, or 0.38 percent, to 1,318.07, and the Nasdaq composite index gained 11.85, or 0.53 percent, to 2,227.67.
Johnson said that while investors are buying, many are looking to important economic data set to come this week. Today, the Commerce Department is scheduled to release its monthly retail sales report, which many on Wall Street view as an up-to-date snapshot of consumer spending behavior. Then, tomorrow, the Labor Department is to release the consumer price index, the key measure of inflation.
"I think to some extent most investors want to wait and see these numbers," Johnson said, noting that investors are still trying to determine whether the economy will have a hard or soft landing.
"They still don't have an answer to that, although it's beginning to look more and more like a soft landing."
Wall Street is also awaiting the Sept. 20 meeting of the Federal Reserve to determine how the central bank sees the economy as well as how the Fed might act as it works to contain inflation. The Fed raised interest rates for 17 straight times over two years before pausing last month.
Investors appeared confident yesterday that the Fed won't rattle the markets next week, said Neil Massa, equity trader at John Hancock Funds.
"The Fed-is-nearly-done rally should be over but it has its moments where it keeps coming back," he said, noting that he is encouraged by the broad-based nature of the recent rally.