NEW YORK — Stocks managed to finish with their third
straight session of gains Tuesday, as the dollar returned near 15-month lows,
helping fuel gains in commodities and offsetting a batch of weak economic reports
and a glum outlook from Home Depot.
The latest big-picture economic data were tepid but didn’t
derail investors’ recent hopes that low interest rates and improvement in
corporate profits will last through the next few quarters.
The Dow Jones Industrial Average, which was off 45 points at
its morning low, finished with a 30-point gain, up 0.3 percent, at 10,437.42,
its highest close since October of last year.
The Dow’s advance was powered by gains in all its
commodity-producing components, which benefited from a modest gain in prices of
raw materials. Exxon Mobil Corp. rose 0.8 percent, Alcoa Inc. gained 1.1
percent and Chevron Corp. was up 0.3 percent.
Oil prices rebounded from a morning sell-off to close with a
slight gain as traders placed bets ahead of inventory data due out Wednesday.
Crude futures ended up 24 cents, or 0.3 percent, at $79.14 a barrel in New
York.
The rally helped spur a 0.3 percent gain in the Dow
Jones-UBS Commodity Index, which also benefited from rallies in copper, wheat
and other components.
In economic news, the government reported
weaker-than-expected levels of industrial production and wholesale-level
inflation for October. The International Council of Shopping Centers and
Goldman Sachs monthly index of chain-store sales slipped 0.1 percent in the
week ended Saturday, but the measure was up a solid 2.4 percent from a year
ago.
The National Association of Home Builders’ monthly gauge of
builders’ confidence held flat at 17 in November, contrary to analysts’ hopes
for a slight uptick.
Investors lately have tended to see a silver lining in bad
economic data, interpreting such reports as further incentives for the Federal
Reserve to keep its key rate target near zero well into 2010.
“There’s no question the economy is facing a long slog
to recovery, but at the same time, all the talk about rates has brought a lot
of buyers into the market,” said Malcolm Polley, chief investment officer
at Stewart Capital Advisors.
After Tuesday’s session, the Dow has posted gains in nine
out of the past 10 sessions. On Monday, all three major indexes closed at new
highs for the year, with larger, more globally diverse firms leading the market
higher for much of November.
Helping to hold the Dow in check Tuesday was a 2.39 percent
slide in Home Depot Inc. after the firm was cautious about the coming holiday
season. Although the home-improvement retailer posted a smaller-than-expected
decline in fiscal third-quarter profit, its outlook for the fourth quarter came
in below analysts’ forecast.
Home Depot’s woes also weighed on the S&P 500 Index’s
consumer-discretionary category, which was the index’s weakest sector, off 1.1
percent. But gains in basic materials, technology and telecommunications stocks
lifted the S&P 500, up 0.1 percent, to 1,110.32, also a fresh 13-month
high.
The Nasdaq Composite Index gained 5.93 points, or 0.3
percent, to 2,203.78. The Russell 2000 Index finished off 0.1 percent.
“It’s getting a lot harder to find well-valued stocks
here,” said Hugh Johnson, chief investment officer at Johnson Illington
Advisors. But he added, alluding to March’s lows: “If we’re starting a new
bull market, this has been a pretty short one at just eight months. You would
expect that we have longer to go, though we could certainly get a short-term
pullback of 5 percent or 10 percent along the way.”
Tuesday’s session revealed a slowdown in volume. After
averaging about 5.8 billion shares a day of NYSE Composite volume this year,
the past two weeks have regularly seen less than 4 billion shares changing
hands. Approximately 3.9 billion shares changed hands on Tuesday.
“When the volumes are this light, even though the
prices are up, you feel like you are standing on a snow bridge in the
spring,” said Chris Wolf, managing partner of Cogo Wolf Asset Management.
“It’s worrisome to us, as it wouldn’t take a lot to shake this right
now.”
Among stocks to watch, Ford Motor shares gained 3 percent
after the automaker got a vote of confidence from billionaire investor George
Soros, whose Soros Fund Management reported a new $53 million stake in the
company.
Pacific Sunwear of California Inc. plunged 22 percent,
further weighing on consumer companies, after the teen retailer reported fiscal
third-quarter loss widened as it suffered slumping sales, particularly toward
the end of the quarter. The company also warned of a much bigger loss in the
current quarter than Wall Street had been expecting.
Treasury prices rose. The two-year note was up 1/32 to yield
0.761 percent. The 10-year note rose 4/32 to yield 3.324 percent.
Via McClatchy-Tribune News Service.
