Stocks move higher on confidence about rates
NEW YORK » Wall Street extended its February rally yesterday, growing confident that interest rates will hold steady even as Federal Reserve Chairman Ben Bernanke tempered his forecast of slowly cooling growth and inflation with a reminder that price pressures remain a concern.
The Dow Jones industrial average stretched its three-day advance to more than 200 points, the first such jump since August 15-17 last year, and had its second straight record close. The rally, triggered Tuesday by signs of an uptick in mergers and acquisitions, was given new life yesterday by a report that the world's two largest beermakers, InBev SA and Anheuser-Busch, are considering joining forces.
The bustle of takeover talk coupled with Bernanke's testimony to Congress have helped send stocks soaring. Bernan-ke's comments yesterday were similar to a day earlier, but he added that inflation could once again pick up, which reminded investors that a rate increase isn't out of the question. That note of caution limited the market's climb.
The prospect of a rate hike looked pretty dim, however, after most of the economic reports released yesterday. The reports showed a big jump in unemployment claims last week, a huge drop in industrial output in January due to large cutbacks and layoffs in the auto industry, and weaker-than-expected manufacturing in the Philadelphia region."The Fed is still data-driven, so we will be looking at the data in the ensuing months," said Jim Herrick, manager of equity trading at Baird & Co. "There's a strong possibility we'll continue this uptrend."
The Dow Jones industrial average climbed 23.15, or 0.18 percent, to a record close of 12,765.01, after reaching a new trading high of 12,779.03.
Broader stock indicators were also higher. The Standard & Poor's 500 index rose 1.51, or 0.10 percent, at 1,456.81, and the technology-laden Nasdaq composite index increased 8.72, or 0.35 percent, at 2,497.10.
The Russell 2000 index of smaller companies was up 1.44, or 0.18 percent, at 815.43.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to 2.45 billion shares, compared with Wed-nesday's 2.71 billion.
Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.71 percent from 4.74 percent Wednesday.
The dollar was mixed against other major currencies, while gold prices slipped slightly.
Oil prices fell a penny to settle at $57.99 a barrel on the New York Mercantile Exchange, stemming a tumble sparked a day earlier by a smaller-than-expected decrease in U.S. heating oil inventories and forecasts of warmer weather to come in the Northeast.