Stocks soar; Dow nears all-time high
Stocks rose on Wall Street for a second day Wednesday. The stock market surged on good news from retailers and the US housing market. The Dow came within 100 points of its all-time high.
The Dow came within 100 points of its all-time high Wednesday after rising sharply for a second straight day.
The market surged following more evidence that the Fed will keep interest rates low, housing will keep recovering and shoppers aren't pulling back on spending, even with a payroll tax hike.
The Dow Jones industrial average rose 175.24 points, or 1.2 percent, to 14,075.37. The index is now less than 100 points away from its record close of 14,164 reached in October 2007.
The Dow has surged 290 points in the past two days, erasing its drop of 216 points Monday when inconclusive results from an election in Italy renewed worries that Europe's fiscal crisis could flare up again.
"The market psychology has clearly shifted. It's no longer sell the rally, it's buy the dips," said Dan Veru, chief investment officer of Palisade Capital Management. "The economic data continues to be strong."
Stocks have surged since the start of the year. The Dow is up 7.4 percent.
Earnings for S&P 500 companies will climb 7.8 percent in the fourth quarter, the third straight quarter of growth, according to data from S&P Capital IQ.
The Standard and Poor's 500 index gained 19.05 points, or 1.3 percent, to 1,515.99. The Nasdaq composite rose 32.61 points, or 1.3 percent, to 3,162.26. The index is 6.5 percent higher for the year, and is about 3.1 percent short of its record close of 1,565.
Investors were also encouraged Wednesday that Federal Reserve Chairman Ben Bernanke stood behind the central bank's low-interest-rate policies as he faced lawmakers for a second day. His comments dissipated worries about the bank's resolve to keep up the program. Those worries sprung up last week when minutes from the bank's last policy meeting revealed disagreement among Fed officials.
Also, the number of Americans who signed contracts to buy homes rose in January from December to the highest level in almost three years. The report continued a string of positive housing news. Sales of new homes jumped 16 percent last month to the highest level since July 2008, the government reported Tuesday.
Home builder stocks rose for the second day in a row. PulteGroup climbed 25 cents, or 1.3 percent, to $19.30, after rising 5.7 percent the day before. The government reported Tuesday that sales of new homes jumped 16 percent last month.
"Some encouraging news for the bulls has been the housing data that has come out over the past couple of days," said Todd Salamone, director of research at Schaeffer's Investment Research.
The analyst said he remained "extremely bullish," on stocks in the medium and long-term, but cautioned that a pullback may lie ahead in coming days after the year's strong gains.
Discount retailers rose Wednesday. Dollar Tree jumped $4.31, or 11 percent, to $45.39 after reporting a 22 percent profit increase. Dollar General also rose $1.61, or 3.6 percent, to $46.56. Family Dollar Stores rose $1.39, or 2.5 percent, to $57.68.
The yield on the 10-year Treasury note rose two basis points to 1.90 percent.
Among other stocks making big moves;
— Priceline.com rose $17.42 to $695.91 after reporting that its net income jumped in the fourth quarter as bookings grew.
— First Solar plunged $4.32, or 13.8 percent, to $27.04 after the company posted disappointing sales for the fourth quarter and gave a weak early outlook for the year.
— Target fell 93 cents, or 1.5 percent, to $63.12 after the No. 2 discount chain's quarterly income fell 2 percent as it dealt with intense competition during the holiday shopping season.
— DreamWorks Animation fell 30 cents, or 1.8 percent, to $16.31 after posting a loss of $82.7 million. The company booked a write-off on its November release "Rise of the Guardians" and on an upcoming movie that needs to be reworked.