US investors filled with holiday cheer sent Wall Street’s major indexes to new highs today, extending the stock market’s winning steak despite a plummeting dollar and signs of weaker consumer spending.
In a session that ended with Santa Claus sounding the closing bell, investors looked past the dollar’s all-time low against the euro, which rose to 1.3483 against the greenback, surpassing its record high set on December 7.
Although the weaker dollar raises the possibility of higher inflation, investors saw the US currency’s decline as an opportunity to help close the trade deficit, since American goods will be less expensive abroad.
And stocks rose despite a Commerce Department report confirming that Americans have reined in their spending. Consumer spending for November rose 0.2%, slightly less than the 0.3% Wall Street expected and far less than the 0.8% jump in October.
“Right now, there’s just no selling going on,” said Todd Leone, managing director of equity trading at SG Cowen Securities. “There’s a lot of money being put to work before the end of the year, and I think that despite whatever news we get, we’ll just continue drifting up.”
The Dow Jones industrial average rose 11.23, or 0.1%, to 10,827.12, its highest close since June 13, 2001.
Broader stock indicators were modestly higher. The Standard & Poor’s 500 index was up 0.56, or 0.05%, at 1,210.13, the best close for the index since August 3, 2001.
The Nasdaq composite index gained 3.59, or 0.17%, to close at 2,160.62.
Stocks rallied through the holiday-shortened week, with investor optimism remaining high. The Dow reached new 3.5 year highs for three sessions in a row, while the S&P saw its second straight high. The Nasdaq, struggling with disappointing earnings and outlooks from technology firms, failed to break the multi-year high set last Wednesday.
For the week, the Dow rose 1.66%, the S&P gained 1.33%, and the Nasdaq climbed 1.19%. It was the second week of gains for the major indexes, which have risen in five of the last seven weeks.
Most financial markets around the world are closed tomorrow for Christmas.
In addition to today’s consumer spending report, the Commerce Department said orders for durable goods – products intended to last three years or longer - rose 1.6% for November.
However, the gains came solely from orders for cars, planes and other transport equipment. Without those, durable goods orders actually fell 0.8%.
Wall Street received a modest boost from the University of Michigan’s consumer sentiment index, which rose to 95.1 in December, up from 92.8 in November. The figure was still lower than the 95.7 analysts had expected, however.
Investors also looked past a slight climb in unemployment claims. The Labour Department reported first-time jobless claims rose to 337,000, up 17,000 from the previous week.
However, analysts noted that claims were still low enough to extend the labour market’s slow recovery.
“On balance, the economic news was OK, not blockbuster, but good enough,” said Ken Tower, chief market strategist for Schwab’s CyberTrader. “We’re still in a very robust rally, and there are no signs that I can see that would stop it from continuing.”
A number of technology firms announced their earnings late on Wednesday. Memory chip manufacturer Micron Technology saw its first-quarter profits rise substantially, earning 23 cents per share compared with just a penny per share a year ago.
The company beat Wall Street estimates by a penny per share, but its revenues were lower than expected. Micron lost 8 cents to 11.80.
PalmSource dropped 45 cents to 12.78 after the handheld software maker said it swung to a profit in the second quarter, but added that profits in the third quarter would be lower than Wall Street had estimated.
Computer software maker Red Hat saw its profits jump 55% in the quarter, meeting Wall Street’s profit expectations. However, the company’s shares fell 2.04 to 13.03 as the Linux distributor missed its revenue targets.
Advancing issues outnumbered decliners by about 5 to 4 on the New York Stock Exchange, where volume was very light due to the impending holiday.
The Russell 2000 index of smaller companies was up 0.91, or 0.14%, at 649.37.