New York – Wall Street traded mostly higher Tuesday, briefly pushing the Dow Jones industrials into record territory after a rise in home construction and a mild reading on consumer inflation encouraged investors to buy.
The technology-dominated Nasdaq composite index and the Russell 2000 index of smaller companies slipped, showing that most of the stock market’s gains were isolated in larger companies that are more impervious to economic stumbles.
Many investors were heartened by the Commerce Department’s report that March housing starts rose 0.8 percent – a feeble rise compared with February’s 7.6 percent advance but much better than the drop investors expected. Building permits also rose. Stocks have had many tumultuous weeks this year because of worries about the financial troubles of the subprime- lending sector spilling into the already-sluggish housing market.
Giving investors some additional relief, the Labor Department’s core Consumer Price Index rose 0.1 percent in March. It was less than expected and alleviated some anxiety about the Federal Reserve’s desire to raise interest rates to curb costs. The overall Consumer Price Index, which takes into account energy and food, rose 0.6 percent in March – the largest increase in 11 months – and was in line with expectations.
Some investors doubt that Wall Street’s optimism will last.
“I think this is sort of a weak relief rally,” said Ed Peters, chief investment officer at Pan Agora Asset Management Inc. in Boston. “It’s nice that the core level of inflation came in lower than expected, but the headline rate is what people live on. There are still problems out there.”
The Dow traded as high as 12,790.02, passing its closing high of 12,786.64 set Feb. 20 and approaching its trading high of 12,795.93, reached the same day.
The Dow rose 52.58, or 0.41 percent, to 12,773.04.
Broader stock indicators were mixed. The Standard & Poor’s 500 index rose 3.01, or 0.20 percent, to 1,471.48, while the Nasdaq composite index fell 1.38, or 0.05 percent, to 2,516.95.
The stock market has been showing strength heading into the first-quarter earnings season. Nearly half the component companies of the Dow Jones industrial average release earnings this week.
Analysts expect the reports to show corporate growth is slowing, but so far this week, many companies’ financial results have surpassed forecasts.
