Dow Soars To New Heights
Wall Street advanced Wednesday, taking the Dow Jones industrials further into record high territory, even as oil prices rebounded from earlier session lows.
Tuesday, the Dow set new closing and trading highs, wiping out records that had stood since Jan. 14, 2000. In late morning trading Wednesday, the Dow rose more than 50 points to a new high.
The government surprised investors by reporting a rise in crude oil inventories, and they were also heartened by news that Saudi Arabia said it wanted to keep prices lower. That brought light sweet crude down, though it recently rebounded and was up 47 cents at $59.15 a barrel on the New York Mercantile exchange. Still, oil prices are down sharply from their trading high for the year of $78.40 a barrel, which came in July.
"It looks like the petroleum data shows that there is more than enough oil to go around. That's good for inflation and for stocks," said Kim Caughey, equity research analyst at Fort Pitt Capital Group.
On Tuesday, the Dow set new closing and trading highs, wiping out records that had stood since Jan. 14, 2000.
In midday trading Wednesday, the Dow rose more than 0.38 percent. The blue chips traded up to 11,786.49; that is now its all-time high.
Broader stock indicators also rose. The Standard & Poor's 500 index was up nearly 6.0, or 0.44 percent and the Nasdaq composite index rose about 0.94 percent.
Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.58 percent from 4.62 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices were down.
Stocks managed to rise ahead of the oil report even after the Institute for Supply Management said growth in the nation's service sector slowed in September from August, reflecting managers' concerns about the economy, interest rates and security issues. And a Commerce Department report that factory orders were weak again in August also left traders undeterred.
Wall Street has been torn between concerns that the economy is slowing too much and anticipation that economic data like Wednesday's reports will persuade the Federal Reserve to keep interest rates steady, or even lower them.
The slowing housing market is a threat to the economy, and it likely will continue on a decline for between six and 18 months, Moody's Economy.com chief economist Mark Zandi tells CBS Radio News. At least 100 major metropolitan areas around the United States should see continued price declines for that time, Zandi predicts.
And in a conversation with CBS News correspondent Trish Regan, one of the first economists to predict this summer that the economy was heading toward recession said the housing market has the power to tip the scales.
"The bust in housing is severe enough itself that it could trigger a recession," said Nouriel Roubini, chairman of Roubini Global Economics, told Regan.
Investors are waiting for more clues about the economy in a speech by Federal Reserve Chairman Ben Bernanke, who is scheduled to speak on savings before the Economics Club of Washington.. Watch the interview
In corporate news, Wal-Mart Stores Inc. fell 69 cents to $48.77 after saying its September sales at stores open at least a year, a closely watched measure of retail performance known as same-store sales, rose 1.3 percent, not 1.8 percent as the company had forecast. The world's largest retailer, which plans to release September sales figures Thursday, said it miscalculated when it issued its projection.
Biotechnology company ImClone Systems Inc. rose $1.85, or 6.81 percent, to $29.02 after saying an unidentified international pharmaceutical company was willing to make an all-stock offer of $36 per share for the company. ImClone also criticized financier Carl Icahn for rejecting the bid and advised shareholders to rebuff his efforts to wrest control of the company.
Automakers drew Wall Street's attention after The Wall Street Journal, citing an unnamed source, reported that the chief executives of GM and Nissan-Renault have called off talks on forming an alliance. Earlier in the day, Bear Stearns cut its rating on Ford Motor Co. to "Peer Perform" from "Outperform" and upgraded rival General Motors Corp. to "Peer Perform" from "Underperform." Ford was up 27 cents, or 3.28 percent, to $8.50, while GM, part of the Dow, was down 56 cents at $32.85.
With gas prices on the decline, sales of pickup trucks and SUVs are on the rise, CBS Radio News correspondent Jim Taylor reports. GM, Ford, Jeep and Toyota all reported increased large-vehicle sales for September.