Stocks edge higher on mixed signs about economy
NEW YORK: Investors are still building on a stock market rally even when the news isn't all great.
Stocks edged higher Monday after zigzagging in subdued trading on mixed economic and corporate earnings reports.
The Dow Jones industrial average rose only 15 points. But modest moves in the market's indicators belie larger forces at work: Investors aren't dumping stocks, even in the face of downbeat news.
Disappointing earnings from Verizon Communications Inc., Aetna Inc. and Corning Inc. kept the market's gains in check, adding another pause to a powerful rally that has sent major indexes rocketing 11 percent in just two weeks.
RadioShack Corp. reported higher second-quarter earnings that beat forecasts, but mainly from cost-cutting — a theme that has become familiar this earnings season and has left many investors disappointed.
Stocks are steady in part because many investors aren't retreating for fear of missing another rally. Even earlier this month, when a spring rally was still stalled, investors likely would have looked to the news out Monday as reason to sell.
On the plus side Monday, a government report showed new home sales posted the fastest increase in June in more than eight years as buyers jumped on reduced prices, low interest rates and a federal tax credit for first-time homeowners. That sent stocks of home builders surging.
Analysts said the market's modest overall moves were a good sign. Brian F. Reynolds, chief market strategist at WJB Capital Group, said investors were surprised by the strength of corporate earnings reports in the past two weeks.
"After a run of any direction stocks take a little break and people kind of catch their breath," Reynolds said. "I think that's especially true now because people were caught off guard. I think so many people were so bearish."
The Dow rose 15.27, or 0.2 percent, to 9,108.51, its first finish above the 9,100 mark since Nov. 5. The blue chips crossed zero 27 times during trading but spent almost the entire day with a loss. The Dow has been up 10 of the past 11 trading days.
The broader Standard & Poor's 500 index rose 2.92, or 0.3 percent, to 982.18, while the Nasdaq composite index rose 1.93, or 0.1 percent, to 1,967.89.
About two stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 4.7 billion shares, compared with 4.4 billion Friday.
Bond prices fell, pushing yields higher, as a busy week of Treasury auctions got underway. The yield on the benchmark 10-year Treasury note rose to 3.73 percent from 3.66 percent late Friday.
In economic news, the Commerce Department said new home sales rose 11 percent in June to 384,000, beating analysts' estimates. The median price of $206,200 was down 12 percent from a year earlier and off nearly 6 percent from May. Last week, stocks got a lift from a better-than-expected rise in sales of existing homes.
Among companies posting results, Verizon's second-quarter earnings fell 21 percent. Cost reductions at the nation's largest wireless carrier failed to keep pace with falling revenue.
Aetna's profit skidded 28 percent on higher medical expenses in its commercial business, and the health insurer cut its profit forecast for the second time in two months. The stock fell 72 cents, or 2.7 percent, to $25.72.
Corning said its second-quarter earnings tumbled from results inflated by a big one-time gain a year ago. The stock fell 50 cents, or 2.9 percent, to $16.50.
RadioShack fell $1.06, or 6.6 percent, to $15 after cost-cutting drove profit growth and sales fell short of analysts' expectations.
Among homebuilders, Lennar Corp. rose 76 cents, or 6.8 percent, to $11.87 and Beazer Homes USA Inc. jumped 36 cents, or 13.9 percent, to $2.95.
Investors have been buying stocks as companies from AT&T Inc. to chip maker Intel Corp. post earnings that are stronger than analysts had predicted. However some analysts remain cautious because expectations have been low.
"Last week was dubbed as a good earnings week, but good compared to what?" asked David Hefty, CEO of Cornerstone Wealth Management in Auburn, Ind. "It doesn't take a lot to get the market excited these days."
The dollar was mixed against other major currencies, while gold prices rose.
Crude oil rose 33 cents to settle at $68.38 a barrel on the New York Mercantile Exchange.
The Russell 2000 index of smaller companies rose 2.42, or 0.4 percent, to 550.88.
Overseas, Britain's FTSE 100 rose 0.2 percent, Germany's DAX index rose 0.4 percent, and France's CAC-40 rose 0.2 percent. Japan's Nikkei stock average rose 1.5 percent.