Stocks sustain upward trend
NEW YORK – Lower oil prices and a rebound in manufacturing activity helped Wall Street extend its rally Friday, lifting the Dow Jones industrials and the Standard & Poor’s 500 index to a five-year high for the fourth straight session. The major indexes each gained about 2 percent for the week.
Investors cheered a Federal Reserve report that industrial production grew 0.7 percent in February after sliding 0.3 percent the month before, with the onset of cold weather driving an upswing in utilities output.
The promising economic report overshadowed downbeat earnings news from General Motors Corp., which said its 2005 loss was $2 billion more than originally reported. Insurance firm American International Group Inc. also posted a steep drop in profit from settling regulatory charges.
But stocks’ gains were limited as the day’s headlines did little to address Wall Street’s persistent worries about inflation and more interest rate hikes from the Fed, said Ken Tower, chief market strategist for Schwab’s CyberTrader.
“I think the question the market is struggling with is whether we are concerned about inflation and too strong an economy, or if the Fed is raising interest rates too much and cooling things off,” Tower said.
At the close of trading, the Dow climbed 26.41, or 0.23 percent, to 11,279.65, its highest level since reaching 11,301.74 on May 21, 2001.
Broader stock indicators also gained ground. The S&P 500 index rose 1.92, or 0.12 percent, to 1,307.25 – its highest close since it reached 1,309.38 on May 22, 2001 – and the Nasdaq composite index added 6.92, or 0.3 percent, to 2,306.48.
Bonds cooled following this week’s rally, with the yield on the 10-year Treasury note edging up to 4.67 percent from 4.64 percent late Thursday. The dollar was mostly higher against most major currencies, and gold prices inched upward.
Trading was volatile amid sharply higher volume as four types of options and futures contracts expired, known as the quarterly “quadruple witching” day. Advancing issues led decliners by 6 to 5 on the New York Stock Exchange.
Crude futures pulled back from this week’s after the Organization of Petroleum Exporting Countries cut its projected global demand by 110,000 barrels a day. A barrel of light crude fell 81 cents to settle at $62.77 on the New York Mercantile Exchange.
The market also weighed a mixed assessment of consumers from the University of Michigan. Its consumer-sentiment index for March was 86.7, unchanged from February but below economists’ prediction of 88.
Analysts noted that while the Dow and the S&P 500 are pressing past multiyear highs, the Nasdaq is still about 30 points off its January record of 2,331.36. Whether the tech sector can close that gap and contribute to the market’s gains could determine how long this rally will continue, Tower said.