Stocks add to steady climb
Friday, January 20, 2012
NEW YORK (AP) — Strong corporate earnings reports and the lowest unemployment claims in almost four years gave investors more reasons Thursday to take risks on stocks, and the market continued its quiet but solid January climb.
The Dow Jones industrial average gained 45.03 points to close at 12,623.98. The Standard & Poor’s 500 index added 6.46 points to close at 1,314.50. Both averages are at their highest since July.
Volume was slightly above average. The market has been subdued this year: The S&P has moved up or down 1 percent or more only twice, and the Dow has moved 100 points only once, a 179-point gain on opening day, Jan. 3.
But the gains have been steady. The S&P has closed higher 12 of 14 days, and all three major averages have recorded healthy advances for the young year — 3.3 percent for the Dow, 4.4 percent for the S&P and 7 percent for the Nasdaq composite index.
Investors appear ready to believe that the economic recovery is for real and getting stronger.
“The market is screaming loud and clear,” said Doug Cote, chief market strategist with ING Investment Management. “Prices have lagged fundamentals, and now they’re catching up.”
In a sign of a bigger appetite for risk, investors moved money out of U.S. debt, a haven during the stock market’s volatile second half of 2011. The yield on the 10-year U.S. Treasury note increased to 1.98 percent from 1.90 percent Wednesday.
The market was led by industries that tend to perform best when the economy is getting stronger — consumer discretionary stocks, financials and industrial companies.
Of the 10 categories of stocks in the S&P 500, the only one that lost considerable ground was utilities — a safe play for investors during turbulent times and the best-performing category last year.
And the economic news Thursday was good: The number of people seeking unemployment benefits plummeted last week to 352,000, the fewest since April 2008. The decline added to evidence that the job market is strengthening.
U.S. consumer prices were unchanged last month, a signal inflation is under control. In the housing market, a third straight increase in single-family home building in December was offset by a drop in apartment construction.