Stocks move higher as Dow hits record
NEW YORK » Investors regained some of their swagger yesterday, sending stocks higher and the Dow Jones industrials to another record close after oil prices plunged and a drop in jobless claims indicated the economy wasn't slowing too quickly.
Thursday's trading stood in sharp contrast to recent sessions in which investors made small bets as they wrestled with whether stocks would eventually push higher with the same vigor as in 2006. Economic data, such as yesterday's unemployment figures, and oil prices, which have fallen for four straight days, have drawn the market's attention as investors try to piece together where Wall Street is headed.
Strength in employment indicates the economy is holding up well as it slows. A number of strong profit forecasts lent support to that notion Thursday. However, investors want the economy to give off some signs of gradual slowdown in order to wring a cut in interest rates from the Federal Reserve.
"The markets had a very strong run in the fourth quarter and we have spent the first week and a half consolidating those gains," said Steven Goldman, chief market strategist at Weeden & Co. He contends stocks remain "in a pretty good period," as with 2006.
The Dow Jones industrial average rose 72.82, or 0.59 percent, to 12,514.98, topping the previous record close, which came Dec. 27, by 4.41 points.
Broader stock indicators also rose. The Standard & Poor's 500 index came within range of its six-year closing high, rising 8.97, or 0.63 percent, to 1,423.82. The Nasdaq composite index advanced 25.52, or 1.04 percent, to 2,484.85.
Bonds fell sharply as the drop in jobless claims pointed to a healthy economy and stirred some concerns that the Fed might not lower rates. Adding to concern, an auction of Treasury Inflation-Protected Securities, or TIPS, drew a lackluster response. The yield on the benchmark 10-year Treasury note rose to 4.74 percent from 4.69 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude, which has already declined 15 percent in 2007, fell to its lowest level since May 2005, settling down $2.14 to $51.88 a barrel on the New York Mercantile Exchange. A pullback by investment funds and an unusually warm winter has unnerved some investors, and in recent days suggested that a period of enormous profits at energy companies might be nearing an end.