US stocks rise as confidence grows September 11, 2010 - 7:09AM
The Dow and S&P 500 closed the week with their seventh gain in eight sessions in a turnaround period for stocks that has seen investors' worst fears about the economy start to dissipate.
The Dow Jones Industrial Average rose 47.53 points, or 0.5 per cent, to 10,462.77, eking out a gain of 0.1 per cent for the week. The broader S&P 500 index gained 5.37 points on Friday, or 0.5 per cent, to 1109.55 points. The tech-rich Nasdaq composite index was up 6.28 points, or 0.3 per cent, to 2242.48.
But the gains were made on the lightest trading volume of the year so far.
The S&P 500 has rallied nearly 6 per cent since the end of August, a month when shares skidded as investors worried that the economy was headed back into recession. The gradual improvement in economic data continued on Friday as US wholesale inventories surged by the largest amount in two years in July.
"That's going to support the probability that the third-quarter GDP is at least going to be a positive number," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville. "All of a sudden the numbers started to turn just enough to say that we're not going to have a double dip, and that forced a lot of money back into the market."
Energy companies gained as crude oil futures jumped 3 per cent to $US76.55 per barrel after the forced shutdown of the biggest pipeline supplying Canadian oil to refineries in the US Midwest and to a key storage hub in Oklahoma.
The PHLX oil services sector index gained 2.8 per cent.
But the technology sector limited gains and the Nasdaq came under pressure after National Semiconductor and Texas Instruments issued weak quarterly financial targets, highlighting continued stress in that sector. National Semi tumbled 6.4 per cent, and TI gave up 0.6 per cent.
The PHLX semiconductor index dropped 1.4 per cent. On the Nasdaq, cell phone chip supplier Qualcomm was the biggest drag, falling 1.2 per cent to $US40.42.
Occidental Petroleum Corp gained 0.8 per cent to $US78.20 and National Oilwell Varco added 3 per cent to $US41.10.
Nokias US shares climbed 1.8 per cent after the mobile phone maker announced it was replacing chief executive Olli-Pekka Kallasvuo with Microsofts Stephen Elop.
Indexes traded in a low-volume, tight range in a week shortened by the Labor Day holiday and with trading desks reduced in numbers because of the Jewish new year celebrations on Thursday and Friday.
Combined volume on the New York Stock Exchange, the American Stock Exchange and Nasdaq was 5.68 billion shares, far below last year's daily average of 9.65 billion.
Stocks remained in the upper end of their trading range of recent months, and analysts said the market lacked a catalyst to move much higher. Technicians are looking at the 1,130 level on the S&P 500 as a potential breakout threshold.
"Nothing is exciting until 1130 on the S&P 500. That's the number we're trying to push through," said Linda Duessel, market strategist at Federated Investors in Pittsburgh.
Some investors say a breakout through 1130 could take the S&P 500 up to 1250 by year's end.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of nearly two to one, while on the Nasdaq, about five stocks rose for every four that fell.
The bond market was lower.The yield on the 10-year US Treasury bond rose to 2.795 per cent from 2.761 per cent on Thursday while that on the 30-year bond was up to 3.873 per cent from 3.845 per cent. Bond yield and prices move in opposite directions.
