The stock market finished the week with the Dow Jones Industrial average and the S&P 500 closing at lifetime highs for a second consecutive day. The Nasdaq Composite shook off earlier weakness to close in the plus column, but is more than 2,000 points below a record.
Investors built on yesterday's momentum by choosing to focus on a better than expected consumer sentiment survey. A buyout of Playtex and hope more deals would materialize this Monday also supported the market.
The Dow Jones industrial average rose 45.52 points, or 0.33 percent, to end at a record 13,907.25. The Standard & Poor's 500 Index gained 4.80 points, or 0.31 percent, to finish at 1,552.50, also a record close. The Nasdaq Composite Index advanced 5.27 points, or 0.20 percent, to close at 2,707.00.
"It's a lot of enthuisam, said Mark Coffelt, chief investment officer and portfolio manager of Empiric Funds. "Investors concluded that things were not as bad as they thought. That started a few days ago with takeover activity and retail sales that were not as bad as expected. When the worse didn't occur and with expectations so low, they quickly bid up the market."
The S&P 500 materials group led the charge, crossing an intraday high of 1,553 set in March, 2000. Energy stocks rose after oil crossed the $73 a barrel mark. Alcoawas again the best percentage gainer on the Dow as speculation intensified that it was vulnerable to a takeover following its defeat to Rio Tinto in the takeover of Alcan.
General Electricwas also a big winner, hitting a 5-year high, after the company reported good earnings and a stock buyback.
Stocks got off to a lackluster start at the open after the latest monthly retail sales data was weaker than expected.
Retail sales fell 0.9% in June following a surprisingly strong 1.4% gain in May. Ex-autos, sales dropped 0.4%.
"It's a bit of a disappointment, but we're looking at the fundamentals down the road," said Scott Anderson, senior economist at Wells Fargo. "I think it's still too early to count the consumer out completely. I think the consumer is just taking a bit of a breather here."
Import prices rose more than expected, rising 1% versus the 0.6% expected by economists.
Business inventories rose 0.5% in May, more than expected.
Traders focused on some firm consumer confidence numbers. The University of Michigan said its consumer sentiment index rose to 92.4 in July, much higher than the 86 expected by economists. Consumers were uplifted by rising stocks and falling gasoline prices.
GE met analysts' expectations with its second-quarter profit, but outpaced revenue estimates. The CNBC-parent said earnings rose to $5.42 billion from $4.95 billion in the same quarter last year and revenue rose 12% quarter-to-quarter. The Dow component also announced plans to exit the U.S. mortgage business with the sale of its subprime mortgage unit, WMC Mortgage.
New York light sweet crude futures rose to trade above $73 a barrel again after an International Energy Agency report said global energy consumption would increase next year.
Energizer was also on the acquisition trail Thursday as it sought to expand its product range beyond batteries and razors by buying Playtex Products for $1.16 billion. The move will expand Energizer's footprint in personal care products with the addition of the Playtex feminine and infant care products as well as Banana Boat and Hawaiian Tropic sun-care brands.
Meanwhile, partners of private equity firm Blackstone Group could have found a way to recoup $553 million in tax payments associated with the firm's initial public offering last month, the New York Times reported Friday.
Subprime concerns returned as rating agency Standard & Poor's downgraded $6.39 billion of subprime mortgage-backed securities Thursday after having warned it would do so earlier in the week.
European Shares Close Higher
The Frankfurt DAX reached a record high Friday before pulling back, while other European indexes also climbed, following stellar gains from the previous U.S. session and more record highs in Asia.
The Frankfurt DAX pushed through its all-time high of 8,136 shortly after the start of trading, but fell back as the session wore on. The London FTSE-100 and Paris CAC-40 followed the German market to close higher. The FTSE CNBC Global 300 was also in positive territory.
In corporate news, the Dutch Supreme Court ruled ABN Amro can proceed with the sale of its U.S. unit, LaSalle, to Bank of America without shareholder approval.
The ruling clears the way for Barclays to proceed with its $87 billion takeover attempt of the Dutch bank, but leaves a Royal Bank of Scotland-led consortium needing to revise its bid or drop out of the running.
On the earnings front, cosmetics giant L'Oreal met analysts' expectations with a 10.4% rise in second-quarter sales and kept its upbeat outlook for the full year despite unfavorable currency conversions.
Asian Stocks Higher
Asian stocks rose, boosted by a record finish on Wall Street after healthy sales outlooks from U.S. retailers and by demand for resources stocks after a $38 billion takeover deal in the mining sector. South Korea closed almost 3% higher, setting its seventh record this month.
South Korea's KOSPI surged 2.8% to a record close after Samsung Electronics jumped over 6% on a media report it may be targeted in a hostile takeover bid. Samsung also reported a less-than-expected fall in second-quarter earnings. And steel producer POSCO gained almost 10% on optimism about second-quarter results.
Tokyo's Nikkei 225 Average closed 1.42% higher, led by Shin-Etsu Chemical which jumped after a brokerage lifted its target price, while chipmakers gained after Samsung posted its earnings, indicating a brighter second half. The rally on Wall Street buoyed a wide range of blue-chip issues including Honda Motor. Shares of metal companies such as Mitsubishi Materials climbed on the Rio Tinto/Alcan deal.
Australia's S&P/ASX 200 Index finished up, after racing to all-time high earlier in session, as mining stocks rallied after Rio Tinto's $38.1 billion bid for Alcan sparked hopes for more deals in the sector.
Singapore's Straits Times Index rose over 1% to a record high, tracking gains on Wall Street and regional markets. DBS Group, United Overseas Bank, and Singapore Telecommunications led the gains.
But Chinese stocks bucked the trend. Shanghai Composite Index slipped, as worries mounted ahead of next week's inflation data about possible monetary tightening, but blue-chip firms with strong earnings prospects lent support.