A late push gave stock indexes moderate gains Tuesday as investors brushed off news that consumer confidence dropped to its lowest level since February.
A big jump in earnings from Walgreen Co. and another corporate acquisition gave investors enough confidence to extend a four-week rally. Stocks were mixed for much of the day but struggled higher at the finish.
With only two trading days left in September, the Dow Jones industrial average is on track for its best September since 1939 with a gain of 8.4 percent in the month so far. It's still up only 4.1 percent for the year.
Stocks got off to a bad start after the Conference Board said its September reading on consumer confidence fell sharply from August and came in well below forecasts. Mostly positive readings from economic data on manufacturing, home sales and jobs have helped push stocks higher this month after a dismal performance on August.
Scott Rostan, founder of Training The Street, which provides courses in financial modeling and corporate valuation, said the small move in stocks compared to the big decline in confidence was indicative of a growing schism between consumers and traders.
"There's a big dichotomy between Main Street sentiment and Wall Street sentiment," Rostan said. Right now, traders are more focused on sentiment and confidence among corporate executives than consumers, he said.
Drug developer Endo Pharmaceuticals Holdings said Tuesday it will buy Qualitest Pharmaceuticals for $1.2 billion. That comes a day after major companies including Unilever NV and Southwest Airlines Co. announced deals. Wal-Mart Stores Inc. said it was pursuing buying a South African company.
In other corporate news, Walgreen Co. soared 11.4 percent after the drugstore chain reported income that easily beat forecasts. Meanwhile technology stocks were being dragged down on disappointment that Research in Motion Ltd. said it would not roll out its competitor to Apple Inc.'s iPad, called the PlayBook, until the beginning of 2011.
The Dow Jones industrial average rose 46.10, or 0.4 percent, to 10,858.14. It's up 8.4 percent so far in September, and extraordinary showing for a month that is historically a weak one for the market.
Investors are "looking beyond today's news at broader indications a double-dip (recession) is more and more remote," said Joe Heider, a principal at Rehmann Financial.
If the Dow can climb above 11,000 it would be a strong indication the market is ready to break out of the broad trading range it's been stuck in since hitting its 2010 high in late April, Heider said.
The Standard & Poor's 500 index rose 5.54, or 0.5 percent, to 1,147.70, while the Nasdaq composite index rose 9.82, or 0.4 percent, to 2,379.59.
Treasury prices rose after the weak report on consumer confidence, driving interest rates lower. The yield on the 10-year Treasury note, which is often used to set interest rates on loans, fell to 2.47 percent from 2.53 percent late Monday.
Apple shares fell $4.30 to $286.86 on heavy volume. Its price plummeted $16.77, or 5.7 percent, in the first three minutes of trading before quickly recovering most of those losses.
Endo Pharmaceuticals shares rose $2.49, or 8.1 percent, to $33.10. Research in Motion shares fell $1.45, or 3 percent, to $46.91. Walgreen rose $3.46 to $33.81.
Rising stocks outpaced falling ones two to one on the New York Stock Exchange, where volume came to 1 billion shares.