The Dow industrials moved higher on Wednesday, a day after setting a record, but the rally in the broader market faltered.
In early afternoon trading, the Dow Jones industrial average was up 0.2 percent, but the Standard Poor’s 500-stock index was down slightly, and the Nasdaq composite was off 0.2 percent.
Signs of a strengthening American economy, continued support from the Federal Reserve, and fairly attractive valuations compared with other assets have helped equities rally this year.
On Tuesday, the Dow ended at 14,253.77 points, breaking through October 2007’s record close of 14,164.53. For the year, the Dow is up more than 8 percent. The S.P. 500 has gained 8 percent in the first three months of the year and is less than 2 percent below its record close.
The larger S.P. 1500 index has already reached record highs, thanks to help from smaller-cap companies.
“I think this is a happiness hangover,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
“What’s happening today is probably people that had been extremely risk-averse during the roller-coaster ride are now feeling comfortable and, sadly, that’s really not the time to buy in when we’re hitting new highs.”
Ms. Forrest said investor attention should start to turn to the labor market, with the closely watched nonfarm payroll report due on Friday. Despite signs of strength in some areas of the economy, the labor market has been healing only slowly.
But an early look at the jobs market on Wednesday was surprisingly strong, with companies adding 198,000 jobs last month, according to a report by the payroll processor ADP, above estimates for 170,000. January’s job gain was also revised up to 215,000. Futures added to gains following the data.
“The ongoing level of the labor market recovery continues to impress investors and that is once again reinforced by these numbers,” said Andrew Wilkinson, chief economic strategist at Miller Tabak in New York.
“Manufacturers and business leaders are telling us that the demand has picked up, that they are short of inventory and that they are adding workers.”
The Commerce Department reported later in the morning that new orders for factory goods fell in January as demand for transportation equipment weakened, but the underlying strength in manufacturing remained intact.
The report said orders for manufactured goods dropped 2.0 percent. Economists polled by Reuters had forecast a 2.2 percent decline in orders after a previously reported 1.8 percent increase in December.
Overnight in Europe, stock markets rose to their highest since the 2008 financial crisis. The European Central Bank, the Bank of England and the Bank of Japan are all expected to stick to ultra-easy monetary policy at meetings this week.
European Union antitrust regulators fined Microsoft 561 million euros ($732 million) for breaking a promise to offer European consumers a choice of web browser. Shares of Microsoft were off 1 percent.
Staples tumbled 7 percent after the company reported lower-than-expected quarterly revenue and forecast weak full-year earnings.
Shares of the drone maker AeroVironment slumped 11 percent after the company cut its full-year forecast on delays in government orders.
Article source: http://www.nytimes.com/2013/03/07/business/daily-stock-market-activity.html?partner=rss&emc=rss
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