The stock market barreled higher Tuesday, driving the Dow Jones industrial average to a three-and-a-half year high, as two Wall Street firms reported better-than-expected earnings and a brokerage gave tech bellwether Intel Corp. a ratings upgrade.
Stocks have climbed steadily since the presidential elections, with good economic data and positive profit forecasts for 2005 assuring investors of further returns. The markets also benefited from the traditional “Santa Claus” rally, as mutual funds and money managers shuffle their portfolio before year’s end.
“The company news that we’ve seen over the past few days has been, on balance, positive, and that’s giving investors the courage to buy,” said Hugh Johnson, chief investment officer for First Albany Corp.
“There’s definitely some window dressing going on as well, where you have portfolio managers making sure they have good performing stocks in their portfolios before year’s end. But for the most part, investors seem to be in a holiday mood.”
The Dow industrials rallied 97.83 points, or 0.9 percent, to 10,759.43. It was the best close for the Dow since June 13, 2001, surpassing a previous 2004 high set on Feb. 11.
The broader Standard & Poor’s 500-stock index closed Tuesday with a gain of 10.78 points, or 0.9 percent, at 1,205.43, just below the three-and-a-half year high of 1,205.72 set on Wednesday. The Nasdaq composite index, full of technology stocks, rallied 23.06 points, or 1.1 percent, to 2,150.91, finishing less than 12 points shy of Wednesday’s multi-year high.
Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee, said the market was being driven by an overall positive outlook for the economy, lower oil prices, historically low interest rates as well as seasonal buying that tends to lift shares in the last weeks of the year.
“There are a lot of positives going on right now,” Berman said. “Even on the days where there has been bad news, the market has rebounded really well.”
While brokerage stocks remained volatile, the 2005 outlooks from Morgan Stanley and Bear Stearns Companies Inc. renewed investors’ hopes that the first half of the new year will see continued economic and earnings growth.
Bear Stearns reported a 22 percent jump in profits, well above analysts’ forecasts, but its shares were off $1.80 at $102.70 as a possible sale of the company was seen as less likely. Morgan Stanley also beat expectations and gained 85 cents at $54.50 despite missing Wall Street’s revenue forecasts.
The tech sector got a lift after Lehman Brothers upgraded Intel Corp. to “overweight,” citing improved forecasts for spending in 2005. That cheered many investors who have been leery of building inventories and slow sales among a variety of technology companies.
On the strength of Lehman’s upgrade, Intel Corp. gained 79 cents to $23.49, while rival Advanced Micro Devices Inc. slipped 11 cents to $21.73 and Texas Instruments Inc. added 23 cents to $23.63.
Pharmaceutical stocks were mixed after a study found safety concerns with an over-the-counter pain reliever sold as Aleve. However, the same study also found no problems with Celebrex, the painkiller made by Pfizer Inc. whose safety was called into question by a separate study last week. Pfizer was up 68 cents at $24.97 on the news, but other drug makers were flat to down as the sector remained under scrutiny. GlaxoSmithKline was off 35 cents at $46.15, and Abbott Labs was off 32 cents at $46.10.
Shares of IAC/InterActiveCorp, an interactive company controlled by entertainment mogul Barry Diller, were up $1.53 at $27.41 after the Internet travel, retailing and ticketing company announced it would separate into two publicly traded entities — one for its travel holdings, and the other for its ticketing, television, financial services and real estate businesses.
Cablevision Systems Corp. jumped $2.95, or 13.3 percent, to $25.06 after the cable TV provider said it would seek a buyer for its startup satellite broadcasting business. Investors had been skeptical about the viability of the high-definition satellite TV service, which is marketed under the brand name Voom.
Overseas, Japan’s Nikkei stock average rose 0.2 percent. In Europe, Britain’s FTSE 100 closed up 0.04 percent, France’s CAC-40 gained 0.16 percent for the session, and Germany’s DAX index climbed 0.07 percent.