Markets climb, led by small-company stocks

NEW YORK, NY - APRIL 09: Traders work on the floor of the New York Stock Exchange on April 9, 2013 in New York City. The Dow Jones Industrial Average hit a new record trading high of 14,706 today, while closing slightly lower at 14,673.46. (Photo by Spencer Platt/Getty Images)
Spencer Platt

NEW YORK The prospect of ongoing stimulus from the Federal Reserve and rising optimism among small business owners helped push stocks back to record levels.

Small business owners were slightly more optimistic in April, according to a survey released Tuesday by the National Federation of Independent Business. That helped push the Russell 2000, an index of small-company stocks, up 1 percent.

The Russell index is 15.8 percent higher since the start of the year and is doing better than the Dow Jones industrial average and the Standard & Poor's 500 index, which include larger, global companies. Small stocks are doing well because they are more focused on the U.S., which is recovering, and don't have as much revenue from recession-plagued Europe as larger companies do.

For stock investors, the economy is "not too hot, not too cold,'' says Michael Sheldon, chief market strategist at RDM Financial. The economy is weak enough that the Fed will continue with its $85 billion-a-month economic stimulus program, but strong enough for companies to generate healthy earnings.

"There is a lot of momentum in the market right now,'' says Sheldon. "It's largely being fueled by the Federal Reserve and modest growth in the U.S.''

The Dow rose 76 points, or 0.5 percent, to 15,167.35, as of noon Eastern Daylight Time. The S&P 500 index rose 13 points, or 0.8 percent, to 1,646.

Banks and insurers rose 1.2 percent, the biggest gain among of the 10 industry groups in the S&P 500 index.

Bank of America climbed to its highest in more than two years. The lender's stock rose 30 cents, or 2.3 percent, to $13.27. JPMorgan rose 60 cents, or 1.2 percent, to $50.27.

Stocks had a lackluster start to the week Monday as investors questioned whether stocks have risen too far, too fast this year. Even news that retail sales unexpectedly rose in April failed to give the market a boost. The Dow ended the day slightly down, and the S&P 500 was flat.

The Dow has risen 15.5 percent this year and the S&P 500 index is 15 percent higher.

Oil edged lower, falling 17 cents, or 0.2 percent, to $94.99 a barrel. Gold fell $2.60 or 0.2 percent, to $1,432. The dollar edged higher against the euro and the yen.

Among stocks making big moves:

Take-Two Interactive Software Inc., the online video game publisher whose titles include "Grand Theft Auto,'' rose 95 cents, or 5.8 percent, to $17.34 after the company reported a profit in its fiscal fourth quarter. Take-Two's revenue more than doubled on sales of "BioShock Infinite'' and other video games.

Tesla Motors jumped $3.20, or 3.7 percent, to $91.07. The electric car maker has surged almost 70 percent since May 8 when it reported its first profitable quarter. The company is also getting a boost after its Model S sedan tied an older Lexus model for the highest score ever recorded in Consumer Reports magazine's automotive testing.

Sony's U.S.-listed shares jumped 9 percent after hedge fund manager Daniel Loeb called for the company to sell part of its entertainment business and use the money to shore up its struggling electronics operation. The stock rose $1.70 to $20.59.

In government bond trading, the yield on the 10-year Treasury note was little changed at 1.92 percent. The yield on the note, which moves inversely to its price, is trading at close its highest in six weeks.

The Nasdaq composite index rose 26 points, or 0.8 percent, to 3,465.