The stock market clung to its recent rally Thursday, overcoming early losses and finishing slightly higher.
NEW YORK (AP) — The stock market clung to its recent rally Thursday, overcoming early losses and finishing slightly higher.
The Dow Jones industrial average rose for an eighth day in a row – its longest winning streak of the year – adding 37 points and setting a fresh 2009 high. Other major indexes rose about 3 points.
Sharp gains in financial and industrial stocks helped turn the market around, overwhelming losses in energy and utility companies.
Trading lacked enthusiasm, however, as it has over the past week, with many investors shying away from making greater commitments to stocks.
With many traders on vacation, volume has been extremely light, adding to the market’s recent choppiness. The day’s economic news, including a slightly smaller-than-expected dip in initial unemployment claims and a fairly benign reading on gross domestic product, did little to excite investors.
Analysts say the market has been running on its own momentum more than anything else, adding that a lot of the improving economic data has already been priced into stocks.
A lot of activity has also been driven by short-covering, analysts say, which tends to magnify the market’s gains. Short-covering occurs when investors have to buy stock after having earlier sold borrowed shares in a bet they would fall.
Traders have been anticipating a pullback for weeks, but any dips in the market continue to be met with more buying.
“There is just too much cash sitting on the sidelines,” said Phil Orlando, chief equity market strategist at Federated Investors.
According to preliminary calculations, the Dow rose 37.11, or 0.4 percent, to close at 9,580.63, after giving up as much as 84 points early in the session. The Dow’s eight-day advance totals 445 points, or 4.9 percent.
The Standard & Poor’s 500 index rose 2.86, or 0.3 percent, to 1,030.98, while the Nasdaq composite index rose 3.30, or 0.2 percent, to 2,027.73.
Both the S&P 500 and the Nasdaq composite indexes have finished higher seven out of the past eight days, rising about 5 percent over that period.
About eight stocks rose for every seven that fell on the New York Stock Exchange, where volume came to 1.16 billion shares, up from 1.05 billion at the close on Wednesday.
In other trading, the Russell 2000 index of smaller companies slipped 0.25, or 0.04 percent, to 583.77.
Gains in some troubled financial stocks helped to offset the market’s losses. Shares of American International Group Inc. surged nearly 27 percent, rising $10.15 to $47.84, as analysts speculated the company might be reconciling with former CEO Maurice “Hank” Greenberg, who could help bring private capital to the company.
AIG shares have more than doubled in eight days.
CIT Group Inc. jumped 22.8 percent, adding 29 cents to $1.56. Citigroup Inc. rose 42 cents, or 9.1 percent, to $5.05.
Analysts said the gains in AIG and other financial shares were likely magnified by a “short squeeze,” in which short sellers scramble to cover their positions in the stocks.
“I think the banks are way overdone right now,” said Terry Morris, senior equity manager at National Penn Investors Trust Co., contending that short-covering drove bank stocks higher on Thursday. “They’re not twice the companies that they were a week ago.”
Earlier this month AIG reported its first profitable quarter since 2007. The government owns roughly 80 percent of AIG after pumping billions of dollars into the huge insurer to save it from collapse.
Shares of Boeing Co. rose, giving a boost to the Dow, after the company said its long-delayed 787 aircraft will be ready for its first flight by the end of this year. Shares jumped $4, or 8.4 percent, to $51.82.
Meanwhile, energy stocks pulled off of their lows after crude prices reversed early losses. Like stocks, oil prices have been extremely volatile in recent weeks as investors try to determine whether current prices are warranted given still weak demand.
Light, sweet crude for October delivery added $1.06 to settle at $72.49 a barrel on the New York Mercantile Exchange.
Among the economic news Thursday, the Labor Department said first-time jobless claims fell 10,000 last week to 570,000, just shy of economists’ expectations for 565,000.
Workers continuing to file for benefits, however, fell more than expected, declining to 6.13 million from 6.25 million in the previous week. It was the lowest level for continuing claims since early April.
Meanwhile, a Commerce Department report showed the nation’s economy shrank at a 1 percent annualized rate in the second quarter. The updated figure was unchanged from an earlier, preliminary reading on the nation’s gross domestic product, which measures the value of all goods and services produced within the U.S. Economists were expecting GDP to be revised to a 1.5 percent decline.
Bond prices mostly fell even after a strong auction of seven-year notes.
The yield on the benchmark 10-year Treasury note rose to 3.47 percent from 3.44 percent late Wednesday.
The dollar was mixed against other major currencies, while gold prices inched higher.
Overseas, Asian stocks fell after China said it would cut investment in some industries. Japan’s Nikkei stock average lost 1.6 percent, while China’s main index fell 0.7 percent.
Britain’s FTSE 100 fell 0.4 percent, Germany’s DAX index fell 0.9 percent, and France’s CAC-40 lost 0.5 percent.