Stocks extend rally with moderate gains
NEW YORK » Wall Street extended its rally with modest gains in the major indexes following two days of sharp advances, despite economic readings that painted a mixed picture of the economy.
Thought the indexes rose, declining issues narrowly outpaced advancers on the New York Stock Exchange.
On Tuesday and Thursday, the market had posted its biggest two-day rally in five years. Hopes have been growing that financial companies may be recovering from the credit crisis and that the Federal Reserve may lower interest rates to calm the markets.
Oil prices spiked early yesterday then fell back somewhat after a fire at an Enbridge Energy pipeline carrying crude from Canada to the Midwest.
The oil price recovery gave some strength to energy stocks. Meanwhile, financial companies and retailers retreated following a weak showing by Sears Holdings Corp.
Aside from a reading on third-quarter growth, economic news didn't offer investors much reason to cheer.
"The data's weak, and says to us that the Fed needs to stay engaged here," said Phil Orlando, chief equity market strategist at Federated Investors.
According to preliminary calculations, the Dow Jones industrial average rose 22.28, or 0.17 percent, to 13,311.73.
Broader stock indicators also rose. The Standard & Poor's 500 index edged up 0.70, or 0.05 percent, to 1,469.72, and the Nasdaq composite index rose 5.22, or 0.20 percent, to 2,668.13.
The Russell 2000 index of smaller companies fell 3.98, or 0.52 percent, to 766.06.
Declining issues outnumbered advancers by about 9 to 7 on the New York Stock Exchange, where volume came to 1.33 billion shares compared with 1.30 billion traded Thursday.
Bond prices rose, with the yield on the benchmark 10-year Treasury note falling to 3.94 percent from 4.05 percent late Thursday. Bond prices and yields move in opposite directions. The dollar rose against other major currencies, while gold prices fell.
Light, sweet crude for January delivery rose 39 cents to settle at $91.01 a barrel in choppy trading on the New York Mercantile Exchange.
Investors have sent stocks sharply higher in recent days in part because Fed Vice Chairman Donald Kohn suggested another interest rate cut could be in store.
The Fed, which has cut rates at each of its last two meetings, is slated to meet again on Dec. 11.
E-Trade Financial Corp. said yesterday that Citadel Investment Group will provide $2.5 billion in cash to shore up its balance sheet. It also said Chief Executive Mitchell H. Caplan has resigned.
E-Trade, which holds billions in risky mortgage debt, said it will sell its entire portfolio of asset-backed securities to Citadel for $800 million and book a $2.2 billion charge on the sale. E-Trade fell 46 cents, or 8.7 percent, to $4.82.
In other corporate news, Sears Holdings, parent of its namesake department store chain and Kmart, said profits plunged to a penny per share from $1.27 per share a year ago due to lower sales and clearance markdowns. The stock fell $12.25, or 10.5 percent, to $104.09.