Dow briefly tops record closing high

Dow briefly tops record closing high

	Published : Tue, 17 Apr 2007 19:56 By : Agencies Print this Story

NEW YORK (AP) - Wall Street traded mostly higher Tuesday, pushing the Dow Jones industrials into record territory after a rise in home construction and a mild reading on consumer inflation encouraged investors to buy.

But the technology-dominated Nasdaq composite index and the Russell 2000 index of smaller companies slipped, showing that most of the stock market's gains were isolated in larger companies that are more impervious to economic stumbles.

Many investors were heartened by the Commerce Department's report that housing starts for March rose 0.8 percent -- a feeble rise compared with February's 7.6 percent advance, but much better than the drop investors expected. Building permits also rose. The stock market has experienced several tumultuous weeks this year due to worries about the financial troubles of the subprime lending sector spilling into the already sluggish housing market.

Giving investors some additional relief, the Labor Department reported that its core consumer price index rose 0.1 percent in March, less than expected, and alleviating some anxiety about the Federal Reserve's need to raise interest rates to curb rising costs. The overall consumer price index, which takes into account energy and food costs, rose 0.6 percent in March -- the largest increase in 11 months -- and was in line with expectations.

Some investors were dubious that Wall Street's optimism would last.

'I think this is sort of a weak relief rally,' said Ed Peters, chief investment officer at PanAgora Asset Management Inc. in Boston. 'It's nice that the core level of inflation came in lower than expected, but the headline rate is what people live on. ... There are still problems out there.'

The Dow traded as high as 12,790.02, passing its closing high of 12,786.64 set on Feb. 20, and approached its trading high of 12,795.93 set the same day.

By midafternoon trading, the Dow was up 45.51, or 0.36 percent, at 12,765.97, helped by rises in Coca Cola Co. and Johnson & Johnson, which reported earnings earlier in the day that exceeded analysts' expectations. The blue chip index is headed toward its 13th rise out of the last 14 sessions.

Broader stock indicators were mixed. The Standard & Poor's 500 index rose 1.67, or 0.11 percent, to 1,470.14, while the Nasdaq composite index fell 2.69, or 0.11 percent, to 2,515.64.

Declining issues outnumbered advancers by about 6 to 5 on the New York Stock Exchange, where volume came to 1.01 billion shares.

Bonds rose following the inflation data, which could give the Fed more room to lower rates. Also heightening that possibility, the Federal Reserve reported Tuesday that March utility production dropped by 7 percent, offsetting a rise in factory production. The yield on the benchmark 10-year Treasury note fell to 4.69 percent from 4.74 percent.

Gold prices slipped. The dollar neared all-time lows versus the euro, and dropped to a 15-year low against the British pound. The dollar's weakness has been brought on by the U.S. economy and interest rates rising less than in other countries.

The stock market has been exhibiting strength going into the first-quarter earnings season. Nearly half the component companies of the Dow Jones industrial average release earnings this week. Analysts expect the reports to show corporate growth is slowing, but so far this week, many companies' financial results have surpassed forecasts.

Coca-Cola, the world's largest drink maker and one of the 30 Dow components, said Tuesday its first-quarter profit jumped 14 percent. The rise beat analyst expectations, thanks to a double-digit increase in worldwide sales despite its troubled North America segment. Coca Cola rose $1.37, or 2.7 percent, to $51.63.

U.S. companies can benefit from markets abroad, despite slowing U.S. growth, market participants say.

'The foreign economies are now large enough and strong enough that they'll be able to help us,' said Joe Balestrino, a portfolio manager at Federated Investors Inc.

Another Dow component, health care products maker Johnson & Johnson, reported a profit drop of 22 percent due to a charge for an acquisition that more than offset record sales. But the results beat forecasts and the company rose $1.89, or 3 percent, to $64.91.

Meanwhile, the financial sector posted mixed earnings. Mellon Financial Corp.'s profits rose and exceeded expectations, as did those of Wells Fargo & Co. But TD Ameritrade Holding Corp.'s profits dropped and missed predictions, and so did U.S. Bancorp's. Mellon rose 83 cents to $44.97; Wells Fargo advanced 7 cents to $35.58; TD Ameritrade fell $1.30, or 7.7 percent, to $15.57; and U.S. Bancorp slipped 10 cents to $34.80.

Investors will also be watching for first-quarter results technology heavyweights Intel Corp. and International Business Machines Corp., which are due to report results after the closing bell. Intel rose 20 cents to $20.89, while IBM advanced 76 cents to $96.94.

Crude oil prices fell 20 cents to $63.41 a barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies slipped 3.44, or 0.41 percent, to 828.00.

Overseas, Japan's Nikkei stock average fell 0.57 percent. Britain's FTSE 100 fell 0.28 percent, Germany's DAX index rose 0.15 percent, and France's CAC-40 fell 0.07 percent.