Economic data helps extend Wall St rally

Economic data helps extend Wall St rally

New York: US stocks edged higher on Tuesday, led by the financial sector as economic data pointed to a sustained if slow recovery from the recession, taking the Dow and the S&P 500 to nine-month highs.

The Nasdaq achieved its highest close since early October.

US consumers spent more in June, though partly because of rising gasoline prices, and contracts to buy used houses rose more than expected and for a fifth-straight month. But income suffered its biggest drop in four-and-a-half years, underscoring fears over growing unemployment.

The S&P financial index rose 2.1% as the housing data was a positive for the sector, while the Dow Jones Home Construction index gained 2.5%.

“The one thing that’s driving this market more than anything is the fear that as an investor, you’re missing out on something big," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore.

“There’s so much power to this rally that a little move down is a correction," and invites more investors in, he said.

Indexes opened lower and seesawed throughout the session, but a late run-up helped extend the earnings-driven rally.

Stocks soared about 40% from March to May but the surge wilted in June. Gains resumed at the start of the second-quarter earnings season. The broad S&P 500 index is up 48.6% from its 12-year closing low on 9 March.

On Tuesday, the Dow Jones industrial average gained 33.63 points, or 0.36%, to close at 9,320.19. The Standard & Poor’s 500 Index rose 3.02 points, or 0.30%, to 1,005.65. The Nasdaq Composite Index edged up 2.70 points, or 0.13%, to end at 2,011.31.

Kraft crumbles, Caterpillar climbs

After the closing bell, Dow component Kraft Foods Inc reported a rise in quarterly profit that exceeded analysts’ expectations. But its stock, which had gained almost 12% in July, fell 2.1 percent to $27.73 in extended trading. On the New York Stock Exchange, Kraft closed at $28.34, up 0.5% before the company, which makes Oreo cookies and Kraft cheese, released earnings.

During the regular session, shares of Dow component Caterpillar, a heavy equipment maker, jumped 6.1% to $47.89 after the company’s CEO gave an upbeat earnings presentation and said that in future recessions the company would be able to report annual earnings well above this year’s forecast.

PepsiCo Inc shares rose 5.1% to $59.06 after it said it agreed to buy Pepsi Bottling Group Inc and PepsiAmericas Inc in a deal worth $7.8 billion, as the second-largest soft drink maker behind Coca-Cola Co seeks to cut costs and boost profits in North America.

Shares of Pepsi Bottling gained 8.5% to $36.49 and PepsiAmericas jumped 9% to $28.50.

Earlier, two of the largest US mall owners, Simon Property Group Inc and Macerich Co, posted disappointing results as consumers remain reluctant to spend, but the companies’ CEOs said retail declines appear to be abating and shares jumped.

Macerich shares shot up 7% to $21.45 while Simon Property, up 6.9% at $60.91, was the top points gainer in the Dow Jones Equity REIT index, which jumped 5.3%.