Dow: Positive ‘but no running on rocket fuel’
The Dow Jones industrials came a step closer to 10,000 today, managing a solid rally as reports of US military victories in Afghanistan increased hopes that the worst is over for the market.
The index has now risen 21% since September 21, its 2001 low, meeting the technical definition of a bull market, but many analysts were sceptical the momentum would last.
They note most of the gains represent the rebound from the post-September 11 terror attack sell-off, rather than buying on concrete signs that business is turning around.
’’The market’s got a positive tone here, but it’s not really running on rocket fuel,’’ said Jon Brorson, director of equities at Northern Trust. ‘‘I wouldn’t be surprised if the market falls back from here.’’
The Dow closed up 109.47, or 1.1%, at 9,976.46. The index is now just 23.54 points below the 10,000 level it last held on September 5. It has risen 21.1% since September 21, when it was at 8,235.81.
Broader stock indicators also did well. The Nasdaq composite index was up 35.84, or 1.9%, at 1,934.42, within striking distance of 2,000, a milestone not seen since August 7.
The Standard & Poor’s 500 index rose 12.41, or 1.1%, to 1,151.06, its best finish since August 29, when the index stood at 1,161.51.
Stocks have been advancing gradually as the market recovered from the sell-off that followed the attacks. Earlier this month, the Federal Reserve cut interest rates for the 10th time this year, in a move designed to stimulate business by making it cheaper to borrow money to expand.
More recently, news in the last week that the Taliban government was retreating in Afghanistan has cheered investors and professional money managers, who had been keeping large amounts of cash on the sidelines because of all the economic and political uncertainty.
Wall Street is also happy about falling energy prices. Cheaper oil and gas bills mean consumers, whose spending accounts for two-thirds of the economy, have more money to spend on other goods and services.
In trading today, financial stocks, thought to be an early leader in a market turnaround, were higher. American Express rose dlrs 1.07 to dlrs 34.20.
Technology stocks also advanced. Microsoft advanced 79 cents to dlrs 66.54.
Phillips Petroleum rose dlrs 1.53 to dlrs 53.35 on word it is merging with Conoco in a dlrs 15.4 billion stock deal. Conoco climbed dlrs 1.68 to dlrs 25.98.
Alcoa gained dlrs 1.37 to dlrs 38.49 after announcing 6,500 job cuts and a plant closure to improve efficiency.
Despite the market’s rise, analysts say investors are well aware the economy remains weak. Third-quarter earnings reports were dismal and few companies have offered any indications that their business is improving.
The Commerce Department reported today that house building in October declined by 1.3% from September a sign that sagging consumer confidence and the weak economy have builders playing it safe.
’’I think it’s too early to tell whether the economy is really improving. I think we may be a little ahead of ourselves here,’’ said Bill Barker, investment strategy consultant at RBC Dain Rauscher. ’’You’re beginning to get a little more confidence from some companies, but the optimism is not widespread.’’
Advancing issues led decliners 3 to 2 on the New York Stock Exchange.
Trading was moderate ahead of the Thanksgiving holiday. Volume came to 1.29 billion shares, compared with 1.35 billion at the same point last Friday.
The Russell 2000 index rose 6.40 to 457.71.
