Dow rises 103 to another record
Wall Street shot higher Wednesday after investors shrugged off a mixed reading on the housing sector and focused on the positives: a jump in industrial output, a retreat in crude oil prices and new cash pouring into the stock market. The Dow Jones industrials rose 103 points to another closing record.
Stocks initially slipped after Commerce Department data showed applications for building permits fell by the biggest amount in 17 years during April punctured an early rally. But they gradually regained strength, finding support from a Federal Reserve report that showed industrial output rose more than expected in April, and a rebound in U.S. crude and gasoline inventories that caused crude oil prices to pull back.
News that billionaires Warren Buffett, Edward Lampert and Carl Icahn were upping equity investments also gave investors confidence that stocks have further to climb, although the Dow has risen more than 1,300 points in the past two months.
Investors seem to be choosing to take weak housing data in stride; a lackluster read on home sales on Tuesday upended a big rally in stocks that sent the Dow Jones industrials briefly above 13,400 for the first time, but the market quickly regained its footing Wednesday.
“We seem to be in a period of time where it doesn’t make a difference what the news is — the market seems to find a reason to go up,” said Ron Kiddoo, chief investment officer at Cozad Asset Management. “How long will this last? It’s anybody’s guess.”
The Dow rose 103.69, or 0.77 percent, to 13,487.53, to its 23rd record close of the year. It also hit a new trading high, 13,489.57.
Broader stock indicators advanced. The Standard & Poor’s 500 index gained 12.95, or 0.86 percent, to 1,514.14, and the Nasdaq composite index rose 22.13, or 0.88 percent, to 2,547.42.
Strength in sectors such as airlines, helped by falling oil prices, gave a lift to stocks. United Airlines parent UAL Corp. advanced $1.32, or 4 percent, to $34.62; Continental Airlines Inc. rose $1.48, or 4 percent, to $37.83; and American Airlines parent AMR Corp gained $1.28, or 5 percent, to $26.66.
Bonds showed little change despite the economic readings. The yield on the benchmark 10-year Treasury note remained flat at 4.71 percent from late Tuesday. The dollar was mostly higher against other major currencies, while gold prices fell.
Light, sweet crude fell 62 cents to $62.55 per barrel on the New York Mercantile Exchange. Crude prices have risen in recent sessions amid concerns about supply disruptions, particularly in Nigeria, but Wednesday’s U.S. inventory data showed domestic gasoline and crude inventories rose more than expected last week — a development that investors hope will help pull U.S. pump prices back below $3 a gallon.
While Wall Street often has an appetite for economic data as it tries to determine where the economy is headed, it sometimes looks past good or bad economic news. In a potentially worrisome sign, requests for new construction permits fell 8.9 percent in April, the biggest drop since a 24 percent plunge in February 1990; but investors were pleased to see that construction of homes and apartments increased 2.5 percent in April from March to a seasonally adjusted annual rate of 1.528 million units.
“It seems like the market has taken a lot of the news positively this year whereas last year investors might have reacted negatively,” said Paul Alan Davis, a portfolio manager at Charles Schwab Investment Management Inc.
The Russell 2000 index of smaller companies rose 6.02, or 0.74 percent, to 820.20.
Advancing issues outnumbered advancers by about 5 to 3 on the New York Stock Exchange, where volume came to 1.51 billion shares, down from 1.64 billion on Tuesday.
Overseas, Japan’s Nikkei stock average closed up 0.09 percent. Britain’s FTSE 100 fell 0.14 percent, Germany’s DAX index fell 0.32 percent, and France’s CAC-40 fell 0.53 percent.