Dow moves briefly into record territory
NEW YORK » Wall Street traded mostly higher yesterday, briefly pushing the Dow Jones industrials into record territory after a rise in home construction and a mild reading on consumer inflation encouraged investors to buy.
The Nasdaq composite index and the Russell 2000 index of smaller companies slipped, showing that most of the stock market's gains were isolated in larger companies.
Many investors were heartened by the U.S. Commerce Department's report that March housing starts rose 0.8 percent -- much better than the drop investors expected. Building permits also rose.
Giving investors some additional relief, the U.S. Labor Department's core consumer price index rose 0.1 percent in March, less than expected, and alleviating some anxiety about the Federal Reserve's need to raise interest rates to curb costs.
The overall consumer price index, which takes into account energy and food, rose 0.6 percent in March -- the largest increase in 11 months.
Some investors doubt that Wall Street's optimism will last.
"I think this is sort of a weak relief rally," said Ed Peters, chief investment officer at PanAgora Asset Management Inc. in Boston. "It's nice that the core level of inflation came in lower than expected, but the headline rate is what people live on. ... There are still problems out there."
The Dow traded as high as 12,790.02, passing its closing high of 12,786.64 set Feb. 20, and approached its trading high of 12,795.93, reached the same day.
The Dow rose 52.58, or 0.41 percent, to 12,773.04. Gains in Coca-Cola Co. and Johnson & Johnson, which reported earnings earlier in the day that exceeded expectations, gave the blue chip index its 13th rise out of the last 14 sessions.
Broader stock indicators were mixed. The Standard & Poor's 500 index rose 3.01, or 0.20 percent, to 1,471.48, while the Nasdaq composite index fell 1.38, or 0.05 percent, to 2,516.95.
The Russell 2000 index of smaller companies slipped 2.48, or 0.30 percent, to 828.96. The index reached an intraday high of 831.71 during the session.
Crude oil prices fell 51 cents to settle at $63.10 a barrel on the New York Mercantile Exchange.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 1.57 billion shares.
Bonds rose following the inflation data, which could give the Fed more room to lower rates. Also heightening that possibility, the Federal Reserve reported yesterday that March utility production dropped by 7 percent, offsetting a rise in factory production. The yield on the benchmark 10-year Treasury note fell to 4.69 percent from 4.74 percent.
Coca-Cola, the world's largest drink maker, said yesterday its first-quarter profit jumped 14 percent. Coca Cola rose $1.30, or 2.6 percent, to $51.57.
Health care products maker Johnson & Johnson, reported a profit drop of 22 percent due to a charge for an acquisition. But the results beat forecasts and the company rose $1.53, or 2.4 percent, to $64.55.