Stocks hit trading high on election-day hopes
NEW YORK » Wall Street extended its November rally yesterday, carrying the Dow Jones industrials to a new trading high as investors anticipated a business-friendly outcome of the mid-term elections and bought stocks across the market.
Boeing Co. led the blue chips after winning a $2.3 billion order from FedEx Corp. Strong quarterly reports from both Toyota Motor Corp. and Emerson Electric Co. also lent strength to the market.
The broad advance came as investors bought optimistically ahead of an election that could strip power from Republicans in the House of Representatives for the first time since 1994. Stocks often rally on elections as Wall Street bets change will lead to an environment more favorable to business; the theory on the Street is that a split in power in Washington will create legislative gridlock, slowing down regulatory change.
"Gridlock is good, Wall Street doesn't like change," said Charles Gabriel, senior Washington analyst for Prudential Securities. "You're not going to have runaway spending increases, you won't have a repeal of the Bush tax cuts, and there's no legislative change that will roil industries. The green light is on for equity investments because you've got protection against any major changes."
The Dow rose 51.22, or 0.42 percent, to 12,156.77, building on Monday's 119-point gain. The index of 30 large-cap stocks rose to as high as 12,196.32 earlier in Tuesday's session, surpassing its previous trading high of 12,167.02.
Broader stock indexes also advanced. The Standard & Poor's 500 index rose 3.06, or 0.22 percent, to 1,382.84, and the Nasdaq composite index added 9.93, or 0.42 percent, to 2,375.88.
Bonds gained, with the yield on the benchmark 10-year Treasury note falling to 4.66 percent from 4.7 percent late Monday. The dollar was mixed against other major currencies, while gold prices rose.
Oil prices again dipped below the $60 mark. A barrel of light sweet crude declined $1.09 to $58.93.
The jump in stocks comes after the Dow had its best day in a month on Monday, soaring as a spate of merger announcements soothed investors who worried last week about an economic slowdown. The two-day rally shows investors remain resilient, and feel the market still has more room to advance.
"I think the move we're seeing this week is that perhaps this might not be a weak economy after all," said Brian Gendreau, investment strategist for ING Investment Management.