BackWall St edges up, Dow nears all-time high
Dow Jones up 0.42%, S&P 500 rises 0.22%, Nasdaq down 0.06%
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New York: US stocks edged higher on Tuesday, putting the Dow within striking distance of all-time highs as investors looked ahead to President Barack Obama’s State of the Union address, which is expected to focus on the economy.
Jobs and economic growth are seen as major themes of Obama’s speech, scheduled to begin at 9pm (0200 GMT Wednesday). Investors will also listen for any clues on a deal with Republicans to avert automatic spending cuts due to take effect 1 March, including the tone of the speech.
The S&P 500 has risen for the past six weeks, putting it up 6.7%so far this year, while the Dow is about 1% away from its all-time intra-day record of 14,198.10, reached in October 2007.
But gains have been harder to come by since the benchmark S&P index hit a five-year high on 1 February. The market has had to consolidate strong gains at the year’s start while investors search for reasons to drive stocks higher.
“We’re likely to settle in for a period and digest the gains we’ve had, though there’s still a bias towards positive momentum," said Eric Teal, chief investment officer at First Citizens Bancshares in Raleigh, North Carolina. “Questions over government spending are the big overhang, and we’re looking for Obama to inspire some confidence over that tonight."
The White House has signalled Obama will urge investment in infrastructure and clean energy, suggesting companies in those sectors may be volatile in Wednesday’s session.
“Gun makers could also see a reaction if Obama talks about anything with respect to gun control," said Teal, who helps oversee $5 billion. Shares of Smith and Wesson were flat at $9.13 while Sturm Ruger was up 0.5% at $53.96.
The Dow Jones industrial average was up 58.06 points, or 0.42%, at 14,029.30. The Standard and Poor’s 500 Index was up 3.34 points, or 0.22%, at 1,520.35. The Nasdaq Composite Index was down 1.91 points, or 0.06%, at 3,190.09.
Housing shares were among the strongest of the day, led by a 14.4% jump in Masco Corp. to $20.35 after the home improvement product maker said it expects new home construction to show strong growth in 2013. The PHLX housing sector index rose 4.3%.
Avon Products Inc. surged 23% to $21.25 as the S&P 500’s top percentage gainer after the cosmetics company reversed sales declines and cut costs.
On the downside, Coca-Cola Co. fell 2.7% to $37.58 and were the biggest drag on the Dow after reporting revenue that was below estimates, hurt by a weaker-than-expected performance in Europe.
Goodyear Tire and Rubber shares slipped 0.4% to $13.86 after it posted a stronger-than-expected quarterly profit, but cut its 2013 forecast due to weakness in the European automotive market.
Michael Kors Holdings shares jumped 10.8% to $63.18 after the fashion company handily beat Wall Street’s estimates and raised its full-year outlook.
With earnings season starting to wind down, Reuters data through Tuesday morning shows of the 353 companies in the S&P 500 that have reported earnings, 70.3% have exceeded analysts’ expectations, above a 62% average since 1994 and 65% over the past four quarters.
Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.3%, according to the data, above a 1.9% forecast at the start of the earnings season.
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