Dow Sails to Another New Record
It was higher and higher for Wall Street on Wednesday, as the Dow Jones industrial average touched a new intraday record en route to its second consecutive all-time closing high. Oil's recent downtrend and mild comments from Federal Reserve Chairman Ben Bernanke helped stocks mount a broad advance despite a reduced sales estimate from Wal-Mart (WMT).
The Dow rose 123.27 points, or 1.05%, to 11,850.61, its best-ever closing level, after hitting a new all-time intraday high of 11,851.25. That topped yesterday's 11,727.34 close and intraday peak of 11,758.95. The broader Standard & Poor's 500 index added 16.11 points, or 1.21%, to 1,350.22. The tech-heavy Nasdaq composite climbed 47.3 points, or 2.11%, to 2,290.95.
NYSE breadth was decidedly positive, with 26 issues advancing for every seven declining. Nasdaq breadth was 22-9 positive.
Investors were cheering falling oil prices, some analysts say. "Even though oil is up today, we're still trying to play catch-up in terms of the drop that we've seen over the last couple of trading sessions," says Chris Johnson, managing quantitative analyst at Shaeffer's Investment Research.
In the energy markets, November West Texas Intermediate crude oil futures closed up 73 cents at $59.41 a barrel, after briefly slipping below $58 as a weekly inventory report revealed an unexpected surge in crude supplies. The short-lived price decline reportedly prompted short-covering, though supply fundamentals are still bearish, says Action Economics.
Remarks by the Fed's Bernanke helped raise hopes the central bank will keep interest rates unchanged and possibly lower rates soon, says Standard & Poor's Equity Research. In a question-and-answer session, Bernanke said a "substantial correction" in the housing market could shave one percentage point from economic growth for the second half of 2006. However, the Fed chief said inflation remains a near-term challenge.
Other economic data also painted a picture of a slowing economy. The Institute for Supply Management's (ISM) services index dropped to 52.9 in September, below expectations, from 57 in August. Factory goods orders were flat in August, as expected, following a 1% decline in July.
A pair of employment reports indicated possible softness in the labor market ahead of Friday's closely watched jobs data. The ADP employment index rose 78,000 in September, below its 107,000 pace in August, while the Hudson employment index fell 2.3% to 100.5 in September, its least optimistic level in a year. On the calendar Thursday is the release of weekly jobless claims.
In corporate news, Wal-Mart lowered its monthly sales forecast Wednesday. Shares of the retail giant edged higher after falling more than 2% in early going as the company said same-store sales will rise 1.3% in September, down from an earlier projection for 1.8% growth.
Automakers drew attention following a pair of analyst calls. Bear Stearns downgraded Ford (F) from outperform to peer perform, but shares rose. The brokerage also raised its rating on General Motors (GM) from underperform to peer perform.
However, shares of GM slipped following reports the company and fellow automakers Nissan (NSANY) and Renault terminated talks about a possible alliance, citing differences over specifics.
Also in autos, Toyota (TM) was higher after Bank of America upgraded the stock from buy from neutral.
Digital-video recording company TiVo (TIVO) was down sharply after a federal appeals court granted EchoStar Communications (DISH) a stay on an injunction that would have prevented the satellite outfit from selling certain DVR products in the U.S.
Meanwhile, XM Satellite Radio (XMSR) was lower after the company said it added more than 285,000 new subscribers during the third quarter, bring its total to more than 7.2 million. Separately, George Haywood resigned from the satellite-radio broadcaster's board of directors.
Rival Sirius Satellite Radio (SIRI) was also lower after the company said it ended the third quarter with 5.1 million subscribers, up 135% from a year earlier.
Elsewhere, Saks (SKS) was higher as the upscale department-store operator said it plans to pay a special dividend of $4 per share, or a total of about $550 million.
European markets finished higher. In London, the Financial Times-Stock Exchange 100 index rose 29.4 points, or 0.5%, to 5,966.5. Germany's DAX index added 54.15 points, or 0.9%, to 6,046.37. In Paris, the CAC 40 index was up 36.76 points, or 0.7%, to 5,256.55.
Asian markets ended mostly lower. Japan's Nikkei 225 index lost 159.54 points, or 0.98%, to 16,082.55. In Hong Kong, the Hang Seng index gained 22.68 points, or 0.13%, to 17,629.21. Korea's Kospi index tumbled 22.22 points, or 1.62%, to 1,352.
Treasury yields dipped following the soft payrolls indicators, the weak ISM report, and the lack of policy references in Bernanke's remarks. The 10-year note rose in price to 102-15/32 for a yield of 4.56%, while the 30-year bond advanced to 96-19/32 for a yield of 4.72%. A big drop in the prices paid component of the ISM services index fanned bond bulls' hopes for no more rate increases this year, says S&P.
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