Stocks rise despite jump in oil prices
NEW YORK » Wall Street extended its record-setting advance yesterday, sending the Dow Jones industrial average within a whisper of 12,000 as investors grew more optimistic that corporate profits will remain robust amid a slowing economy.
The blue chip index was less than 3 points away from reaching the milestone for the first time, then fell back minutes before the close; it still managed a record high finish, its seventh in two weeks. A deluge of earnings reports, including 12 from Dow component companies slated this week, could make or break the Dow's three-week run at record levels.
The Dow closed up 20.09, or 0.17 percent, at 11,980.60. In the final hour of trading, the index reached a record trading high of 11,997.25.
Broader stock indicators also advanced. The Standard & Poor's 500 index rose 3.43, or 0.25 percent, to 1,369.05, and the Nasdaq composite index rose 6.55, or 0.28 percent, to 2,363.84.
Bonds rose, with the yield on the benchmark 10-year Treasury note dipping to 4.78 percent from 4.80 percent Friday. The dollar was mixed against other major currencies, while gold prices rose.
The advance came despite a sharp rise in energy prices, with natural gas having its biggest increase since July. Light, sweet crude closed up $1.37 at $59.94 on the New York Mercantile Exchange.
Although the overall market has been going up along with the Dow, a trend that points to investors' rising optimism, analysts said the blue chips' record highs also show some need for safety.
"People are arguing at what pace and severity the economy is slowing," said J. Michael Barron, chief executive of Knott Capital. "Those are markets where traditional, big cap stocks tend to outperform. I think the underlying reason the Dow is moving higher is that people are uncertain as to what's happening right now, and the safer bet is to go with global brands."
But Michael Sheldon, chief market strategist at Spencer Clarke LLC, said the Dow's rise benefits the rest of the market.
"The biggest impact from the Dow is that it starts to increase investor interest in equities in general, and we might see more investors that have been waiting on the sidelines put money to work in the market," he said.
So far, early indications of how companies fared during the third quarter have been mixed. Wachovia Corp.'s reported profit rose 13 percent, but revenue missed projections. Toy maker Mattel Inc. topped Wall Street projections, while Charles Schwab Corp. posted a strong profit on lighter-than-expected revenue.