NEW YORK — Another wave of optimism swept over Wall Street Tuesday, carrying stocks higher and lifting the Dow Jones industrials to their highest level in nearly three months.
Market watchers said the market’s advance, which gained momentum during the afternoon, reflected growing sentiment that the Federal Reserve will cut rates for a fifth time this year when it meets May 15.
“There’s a general feeling that the market has begun to act much better ... and it’s a little safer to do some buying,” said Todd Clark, co-head of listed trading at WR Hambrecht. “But I’m hard-pressed to find any news or earnings to explain these gains.”
The advance appeared to be the latest extension of the rally that began in early April on Wall Street. Convinced that stock prices will start to recover by early 2002, many institutional and individual investors have gradually been coming back into the market.
— The Associated Press
Most spectacularly, the battered Nasdaq has risen more than 32 percent from its closing low for the year, 1,638.80, reached less than a month ago on April 4.
Although the market has had some down days, for the most part it has kept its gains – an encouraging sign to many analysts.
The release of mixed economic data Tuesday added to Wall Street’s hopes that the Fed would feel compelled to stimulate the economy by lowering interest rates at its May meeting. The Commerce Department said construction spending rose more than expected in March, the fifth straight monthly increase. But the National Association of Purchasing Management reported manufacturing activity declined for the ninth consecutive month in April.
Gains by airplane manufacturer Boeing and consumer products maker Procter & Gamble led the Dow higher. Boeing rose $1.63 to $63.43, while P&G was up $4.13 at $64.18 on a better-than-expected earnings report.
Technology stocks also advanced, recovering from a sluggish start earlier in the session. Cisco Systems rose 82 cents to $17.80 and Microsoft, a Dow component, advanced $2.42 to $70.12. Online travel agent Expedia rose $4.11 to $30.12, a nearly 16 percent gain, after announcing it had reached profitability.
But some investors Tuesday sold stocks to lock in their profits. Oracle fell 12 cents to $16.04.
And there were a few other disappointments: Ford Motor dropped $1.18 to $28.30 on a steeper-than-expected slide in April auto sales.
“The market made a very strong advance in April, so I think some of the selling and consolidation we’re seeing is normal,” said Will Braman, chief investment officer at John Hancock Funds. “At the end of the month, people will stop, look at their portfolios, see that a stock’s gained a lot and maybe trim some of their position to buy a cheaper stock.”
Trading volume was light. Advancing issues led decliners more than 3 to 2 on the New York Stock Exchange. Consolidated volume came to 1.40 billion shares, compared with nearly 1.50 billion Monday.
The Russell 2000 index rose 5.15 to 490.47.
Overseas, Japan’s Nikkei stock average rose 3.5 percent. Germany’s DAX index was up 1.5 percent, Britain’s FT-SE 100 was down 0.7 percent, and France’s CAC-40 was up 1.2 percent.
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com