Optimistic investors push stocks higher

Wall Street enjoyed a modest rebound today after three weeks of losses, advancing as investors felt more optimistic about the economy and indulged in a little profit taking. Falling oil prices and a strengthening dollar also spurred buying.

The economy was foremost on investors’ minds.

There was no significant economic data released today, so the market was anxiously awaiting gross domestic product and employment numbers later in the week and hoping they would show the economy has enough strength to overcome inflation.

“Investors are cautiously putting a foot back into the market,” said Michael Sheldon, chief market strategist at Spencer Clarke.

“The market appears to be oversold, but investors are going to need some sort of catalyst, whether it’s falling oil prices or earnings or some of the economic data coming out this week, to really have the confidence to push things higher.”

The Dow Jones industrial average rose 42.78, or 0.4%, to 10,485.65.

Broader stock indicators also gained ground. The Standard & Poor’s 500 index was up 2.85, or 0.2%, at 1,174.27, and the Nasdaq composite index climbed 1.46, or 0.1%, to 1,992.52.

Investors were also cheered as the dollar gained ground against most major currencies, including the euro and the Japanese yen. Crude oil futures continued their slow retreat, with a barrel of light crude settling at $54.05, down 79 cents, on the New York Mercantile Exchange.

Bonds continued their slide, with the yield on the 10-year Treasury note rising to 4.64%, up from 4.59% late Thursday. Gold prices fell as the dollar gained strength.

Analysts noted that Monday’s move up came on very light volume, and the advance-decline lines showed decliners slightly ahead. And while the energy sector continued to lead the market for 2005, it was the worst performer of the month so far, despite record crude oil prices.

“Take that into consideration and you’re looking at a very short-term, leaderless kind of selling reprieve, more than anything else,” said Brian Belski, market strategist at Piper Jaffray.

“People aren’t jumping up and down to get back in to this market. They’re going to want to see a few days of solid upside and some real leadership from any sector, really, before they get back in.”

Advancing issues slightly outnumbered decliners on the New York Stock Exchange, where volume was moderate. The stock market was closed on Good Friday.

The Russell 2000 index of smaller companies was down 0.11, or 0.02%, at 615.16.