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Dow up on some retail reports, Alcan bid
NEW YORK Stocks surged today, pushing the Dow Jones Industrial Average into record territory as bright spots among retailers’ generally sluggish June sales reports allowed investors to toss aside concerns about the health of the economy that have for weeks dogged Wall Street.
A new bid for aluminum maker Alcan Inc. added to the upbeat mood of the session, which saw the Dow jump more than 180 points to a new intraday high. The rise marked a sharp contrast to the start of the week when stocks fell sharply amid concerns that some hedge funds could succumb to ill-placed bets on the housing sector.
Although retail sales generally appeared to be crimped last month by higher gasoline prices and a tepid housing market, and the outlook for the coming months was difficult to ascertain, the overall reading wasn’t as dour as some investors expected. Several reports beat Wall Street expectations — notably that of Wal-Mart Stores Inc., the world’s largest retailer, which posted a better-than-expected 2.4 percent jump in sales at stores open at least a year.
The report from Wal-Mart, one of the 30 companies that make up the Dow Jones Industrial Average, helped ease some investors’ worries about the health of the consumer ahead of the Commerce Department’s report tomorrow on U.S. retail sales.
“This is the first positive month Wal-Mart has had in a while,” said Doug Roberts, chief investment strategist for investment research company Channel Capital Research, citing one reason for the market’s move higher. “The market has a split personality. This is the other side of the personality,” he said, referring to a turnaround in sentiment from Monday.
“The kind of disaster situation that everybody was preparing for doesn’t seem to be playing out.”
In midday trading, the Dow rose 183 points, or 1.34 percent, to 13,760, after climbing to 13,769, an intraday record. The Dow’s record close is 13,676, set June 4.
Broader stock indicators also surged higher.
The Standard & Poor’s 500 index rose 17 points, or 1.14 percent, to 1,536, nearing its record close of 1,539, which also came June 4.
The Nasdaq Composite Index rose 29, or 1.08 percent, to 2,680.
Stocks’ ascent today after mostly unremarkable trading in recent weeks could also reflect so-called short covering. Investors who sell stocks short are betting the stock will fall and can be forced to buy stocks when markets move higher, adding to the overall move higher.
The 10-year Treasury note’s yield fell to 5.08 percent, down from 5.09 percent late yesterday, adding to stock investors’ glee. The dollar was generally lower against other major currencies, dropping to a new low against the euro and a 26-year low against the British pound. Gold prices rose.
Light, sweet crude fell 18 cents to $72.38 per barrel on the New York Mercantile Exchange.
Wall Street received an additional boost after mining company Rio Tinto offered to buy Canadian aluminum producer Alcan for $38.1 billion. The offer topped a bid from Alcoa Inc. that Alcan’s board rejected in May, and Alcoa is considering whether to make another bid.
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