NEW YORK (AP) — Wall Street waffled its way to a modest gain yesterday as mixed economic news and a car bombing in Iraq revived investors’ caution after the big rally on Monday.
“We continue to be taking some comfort in improving economic data,” said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. But “while investors want to anticipate the [good] news we have been getting recently, they are at the same time being cautious about prices.”
The major indexes fluctuated throughout the session. After falling as much as 60.72, the Dow Jones Industrial Average closed up 16.45, or 0.2 percent, at 9,428.90. On Monday, the Dow gained 90.76 to close at its highest level since June 20 last year.
The market’s broader gauges also were higher. The Nasdaq Composite Index rose 21.62, or 1.2 percent, to 1,761.11. Analysts said the Nasdaq was able to post a bigger gain than the other major indexes because its smaller-company components haven’t rallied with the same intensity as Dow and S&P stocks. Investors also are more inclined to buy stock in smaller firms and tech companies when the economy is growing.
The Standard & Poor’s 500 index advanced 2.61, or 0.3 percent, to 1,002.35. The Russell 2000 Index, which also tracks smaller-company stocks, advanced 7.78, or 1.6 percent, to 488.70.
While economic data have been improving, the market has advanced only modestly during the month, typically a slow time on Wall Street as traders and investors take summer vacations.
“We’re obviously in the summer doldrums, but you know this market wants to go up,” said Scott Wren, equity strategist for A.G. Edwards & Sons.
The market’s upward momentum was slowed somewhat by a Dow Jones Newswires report on the University of Michigan’s preliminary consumer sentiment index for the month. Consumer confidence this month stands at 90.2, below the 90.9 level of July and beneath analysts’ forecast of 91.2.
Investors closely monitor consumers’ moods because their spending accounts for two-thirds of the economy. By closing time yesterday, investors had decided that consumer sentiment is at healthy levels.
“Consumer confidence, while not as high as expected, is still rather positive at comfortably over 90,” Mr. Caffrey said.
Wall Street also ended up looking past a car bombing in Baghdad that destroyed the hotel housing the headquarters of the United Nations in Iraq. The explosion killed at least two persons, including the world body’s chief official in Iraq, and wounded dozens.
Stocks got some support from a Commerce Department report that home construction rose in the past month to the highest level in more than 17 years. The housing market showed no indication that it might pull back as mortgage rates began to rise.
Housing construction totaled 1.87 million units at a seasonally adjusted annual rate last month, an increase of 1.5 percent over 1.85 million units in the previous month. The gain, which put housing starts at their highest level since April 1986, was much better than analysts had forecast.
Home builders were among Wall Street’s winners yesterday. Centex climbed $2.69 to $78.59, and Lennar rose $2.35 to $68.50.
The Nasdaq got a boost from Staples and Broadcom. Staples advanced $2.15 to $22.53 after posting second-quarter earnings that topped analysts’ expectations by 2 cents a share and raising its outlook for rest of the year.
Broadcom rose $2.50 to $25.35 after CIBC World Markets as well as Thomas Weisel upgraded the communications chipmaker.
Advancing issues outnumbered decliners 9-to-5 on the New York Stock Exchange. Volume totaled 1.29 billion shares, up from 1.23 billion traded Monday.