Better news on retail sales and manufacturing helped send stocks higher Tuesday, as did comments from Federal Reserve Chairman Ben Bernanke that the recession was probably over.
NEW YORK (AP) — Better news on retail sales and manufacturing helped send stocks higher Tuesday, as did comments from Federal Reserve Chairman Ben Bernanke that the recession was probably over.
Surging materials and industrial companies like Alcoa and Caterpillar helped pull the Dow Jones industrial average to a gain of 57 points in quiet trading. Manufacturers are expected to be among the early beneficiaries if the economy strengthens and demand picks up.
Hopes for a rebound grew after the government reported that retail sales jumped in August by the biggest amount in three years. The Fed’s index of manufacturing in the New York region rose to its best level since late 2007.
Those doses of positive economic news helped allay concerns about a separate government report finding that inflation at the wholesale level rose last month at double the rate analysts expected. Meanwhile Bernanke cheered investors by saying that the worst recession since the 1930s has “very likely” ended.
Bernanke’s assessment of the economy was welcomed by investors who have been placing big bets on a recovery. The Standard & Poor’s 500 index, the benchmark for many mutual funds, has surged 55.6 percent since skidding to a 12-year low in March.
Stocks zigzagged in morning trading before gaining steam in the afternoon, similar to how trading played out Monday. Analysts say the slow-building gains are a sign that investors are pouncing on dips to get into the rally.
The short-lived bouts of selling have meant the market has advanced without the sizable break, which many analysts still say is overdue. Even when the news isn’t good, market sentiment seems immune to developments that would have punctured the rally only months ago.
Investors shrugged off news that wholesale prices rose 1.7 percent jump last month, and disappointing earnings from two major retailers, Best Buy Co. and Kroger Co., also failed to push the stock market off course.
“You want to say that the market is a little bit tired after the run we’ve had yet we continue to grind higher,” said Ryan Larson, senior equity trader at Voyageur Asset Management.
According to preliminary calculations, the Dow rose 56.61, or 0.6 percent, to 9,683.41, its highest close since Oct. 6, when it finished at 9,956.
The S&P 500 index rose 3.29, or 0.3 percent, to 1,052.63, while the Nasdaq composite index rose 10.86, or 0.5 percent, to 2,102.64.
Two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.5 billion shares compared with 1.2 billion Monday.
The government’s report that retail sales jumped 2.7 percent in August boosted confidence in the economy. Analysts say improvements in consumer spending are crucial to a recovery.
Even after stripping out the sizable gains from the government’s popular Cash for Clunkers program, sales rose 1.1 percent, well beyond the rise of 0.4 percent expected by analysts.
Commodity and industrial stocks rose following the Fed’s report on manufacturing. Alcoa Inc. added $1.05, or 8.1 percent, to $13.99. Caterpillar Inc. rose $2.93, or 6 percent, to $51.70.
Gregg S. Fisher, chief investment officer at financial advisory firm Gerstein Fisher in New York, said despite the recent gains investors could still run into trouble.
“Investors are always following the herd. I think investors should sort of catch themselves now and not get overconfident,” he said.
The market’s latest gains came one year after the Dow tumbled 500 points following the collapse of Lehman Brothers Holdings Inc., which deepened the recession.
Bond prices fell. The yield on the benchmark 10-year Treasury note edged up to 3.45 percent from 3.43 percent late Monday.
Crude oil rose $2.07 to settle at $70.93 a barrel on the New York Mercantile Exchange.
The Russell 2000 index of smaller companies rose 4.81, or 0.8 percent, to 604.84.
The dollar was mixed, while gold prices rose.
Overseas, Britain’s FTSE 100 rose 0.5 percent, Germany’s DAX index rose 0.2 percent, and France’s CAC-40 added 0.6 percent. Japan’s Nikkei stock average rose 0.2 percent.