Rosy economic news pumps Dow up 172
By Bruce Meyer
NEW YORK The Dow Jones industrials posted their fourth straight winning week today after surprisingly strong home sales and durable-goods orders bolstered investor hopes for a sustainable economic recovery.
Analysts said news that U.S. troops had captured some of Saddam Hussein's bodyguards in a raid in Iraq helped power today's strong market advance. Volume also was somewhat light, creating sharper price swings.
"A lot of investors were worried about whether the economy is picking up. But the ... (reports) were pretty good, so that gives investors a little confidence to get back into the market," said Brian Williamson, an equity trader at the Boston Company Asset Management.
The Dow closed up 172.06, or 1.9 percent, at 9,284.57, following a loss of 82 points in the previous session. It was the Dow's biggest one-day point advance since June 16, when the blue chips closed 201.84 points higher.
Broader stock indicators also finished higher. The Standard & Poor's 500 index rose 17.08, or 1.7 percent, to 998.68, and the Nasdaq composite index gained 29.28, or 1.7 percent, to 1,730.70.
For the week, all three main gauges finished higher, with the Dow up 1.1 percent, the Nasdaq up 1.3 percent, and the S&P up 0.5 percent. The Nasdaq and S&P posted their third winning week out of the last four.
The Commerce Department reported that new orders for durable goods costly manufactured products expected to last at least three years increased 2.1 percent in June from May. That marked a stronger performance than the 1.2 percent rise that economists were forecasting.
In a separate report, the department said sales of new single-family homes rose at a seasonally adjusted annual rate of 1.16 million units in June, a 4.7 percent increase over May's level. Economists had been predicting a decline.
Trading has been choppy in recent days as investors sift through the second-quarter earnings season. Analysts say investors are hoping to find strong evidence that the economy is firmly back on track.
"The economic data overall has been pretty good. But there's a lot of good and bad earnings reports leading to day-to-day volatility," said Barry Berman, head trader for Robert W. Baird & Co.
All 30 Dow components posted gains. Alcoa increased 87 cents to $26.71 despite Thursday's disclosure by the aluminum maker that interruptions at two of its plants will reduce earnings in the second half of the year by $15 million to $25 million.
Pfizer rose 49 cents to $33.04 even though the drug company reported a loss of $3.59 billion due to nearly $6 billion in expenses related to the recent acquisition of Pharmacia Corp.
Decliners included Internet auctioneer eBay, which fell $3.50 to $112.24, despite posting record profits after yesterday's close and announcing a two-for-one stock split. The company's revised growth projections were not as bullish as many investors had hoped.
Advancing issues outnumbered decliners 2 to 1 on the New York Stock Exchange.