Investors cheering gridlock in Congress
NEW YORK » Wall Street rose for a third straight session yesterday, with the Dow Jones industrials reaching another record close as investors grew more confident that a huge victory by Democrats in congressional elections would result in gridlock and keep lawmakers out of the way of business interests.
The market had largely expected Democrats to gain control of the House of Representatives, but an undecided Senate race in Virginia had, during early trading, unnerved investors who dislike such uncertainty. Stocks showed gains following the announcement that Defense Secretary Donald H. Rumsfeld will resign.
Some investors saw "headline risk" from yesterday's news but expect that Wall Street will quickly get back to business.
"I would think over the next several weeks that investors should return their focus to the likelihood for interest rate moves in the decelerating economic climate, the moderating earnings growth and the weakening housing market," said Elizabeth Weymouth, global investment specialist at JPMorgan Private Bank.
The Dow rose 19.77, or 0.16 percent, to 12,176.54. The blue chips closed above the record of 12,167.02 set on Oct. 26 and came within a few points of a record trading high of 12,196.32 reached Tuesday.
Broader stock indicators also advanced. The Standard & Poor's 500 index was up 2.88, or 0.21 percent, at 1,385.72, and the Nasdaq composite index rose 9.06, or 0.38 percent, to 2,384.94.
Bonds rose, with the yield on the benchmark 10-year Treasury falling to 4.64 percent from 4.66 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude rose 90 cents to $59.83 on the New York Mercantile Exchange after the Energy Department reported domestic crude inventories rose last week but that gasoline stores fell.
The gains this week continue a run-up seen in October that was interrupted last week when a string of poor economic data sent stocks lower. Already this week the major indexes are up at least 1.5 percent and have offset last week's losses. While Wall Street wants an economic slowdown to ease inflation and persuade the Federal Reserve to lower short-term interest rates, investors grew concerned last week that perhaps the economy was cooling too quickly and would fall into a recession. A series of private equity buyout deals lifted spirits Monday as have some better-than-expected profit reports.