New York – Wall Street advanced for a third straight session Wednesday, although the Dow Jones industrial average fell just short of touching its record-high close after a jump in oil prices stifled investors’ enthusiasm.
Falling crude-oil prices and an increase in new-home sales had helped investors shrug off a weak durable-goods report earlier in the session, putting the Dow just 2.21 points away from the closing record of 11,722.98 it set Jan. 14, 2000.
“I think most of the activity is this push to make a close at all-time highs,” Ryan Larson, senior equity trader at Voyageur Asset Management, said of much of Wednesday’s early movement.
“I think it was a little bit exhausted,” he said of the idea of a record-breaking day.
He added that the market’s gains shouldn’t be ignored and that optimism remains.
The Dow closed up 19.85, or 0.17 percent, at 11,689.24, its second-best close ever. The Dow has gained 181.14 over the past three sessions.
Broader stock indicators also moved higher. The Standard & Poor’s 500 index rose 0.25, or 0.02 percent, to 1,336.59, and the Nasdaq composite index advanced 2.05, or 0.09 percent, to 2,263.39.
The Commerce Department said Wednesday that orders to U.S. factories for large manufactured goods fell for a second straight month in August, the first time in more than two years there have been consecutive declines. Consumer demand for durable goods dropped 0.5 percent last month to $209.7 billion.
Some good news came in a report that new-home sales rose 4.1 percent in August, their biggest increase in five months. The Commerce Department data raised hopes that a sharp decline in the housing industry could be easing.
Light, sweet crude settled up $1.95 at $62.96 a barrel on the New York Mercantile Exchange.
The dollar was mixed against other major currencies, while gold prices rose.
Wall Street’s advance this week, which followed several weeks of sometimes fitful gains, has been fed by growing signs that the economy is moderating, not headed for a hard landing.
Arthur Hogan, chief market analyst at Jefferies & Co., said he doesn’t see the overall rise in stocks as being short-lived given that the recent run-up has been based on a range of events, most notably the Federal Reserve’s decision to again hold interest rates in place and a decline in price of oil.
“The economy has been doing well and yet the market hadn’t been in step with that because we had the specter of high interest rates and rising energy prices.
“As long as we can continue to see that economic data stream remain relatively positive I think we can continue,” he said.
Investors have grown more confident in the strength of the economy after the Federal Reserve has signaled interest rates are in check for now and as oil prices have fallen more than 20 percent since July.
Several Dow components reported good news Wednesday, though it wasn’t enough to push the blue chip average to new highs.
McDonald’s Corp. rose to a six-year high, advancing 76 cents to $39.82, after saying it would boost its dividend 49 percent to $1 from 67 cents.
Another Dow component, Merck & Co., rose 64 cents to $42.40 after scoring another victory in its legal battle over its painkiller Vioxx. A federal jury determined after a two-week trial that there wasn’t sufficient evidence to link Vioxx to a Kentucky man’s heart attack in 2003. Though it was a win for Merck, thousands of cases are still pending over the drug.
Investors soured on Verizon Communications Inc., also part of the Dow, after it said a plan to replace more than half of its copper telephone network with fiber-optic cable would cost $22.9 billion. The communications company, which fell $1.18, or 3.11 percent, to $36.62, plans to use the expanded network capacity to sell cable TV and faster Internet connections.
Gap Inc. rose 57 cents, or 3.05 percent, to $19.07 after Morgan Stanley upgraded the stock to “Overweight” from “Underweight,” saying the retailers new clothes and marketing plans are gaining traction.
Red Hat Inc., the largest distributor of the open source Linux operating system, fell $6.11, or 23.21 percent, to $20.21 following analyst downgrades to the stocks after a disappointing second quarter.
The markets often move higher near the end of a quarter as investors engage in a bit of window-dressing and bid up stocks in the hopes of burnishing their quarterly numbers.
Advancing issues outnumbered decliners by roughly 2 to 1 on the New York Stock Exchange, where volume came to 1.72 billion shares, compared with 1.75 billion traded at the same point Tuesday.
The Russell 2000 index of smaller companies was up 2.93, or 0.40 percent, at 732.54.
Overseas, Japan’s Nikkei stock average closed up 2.51 percent.
Britain’s FTSE 100 closed up 0.96 percent, Germany’s DAX index was up 0.49 percent, and France’s CAC-40 was up 0.45 percent.
— On the Net: New York Stock Exchange: Nasdaq Stock Market: AP-WS-09-27-06 1728EDT
