Stocks ended just off the highs of the day Tuesday amid light volume and despite a couple of weak economic reports, as energy and telecom gained.
The Dow Jones Industrial Average rose 81.13 points, or 0.7 percent, to close at 12,279.01, after closing lower in the previous session, alsoamid low volume. For the month, the blue-chip index has gained 0.43 percent.
Among Dow components, Home Depot AT&T and Cisco rose, while Hewlett-Packard and Intel fell.
The S&P 500 rose 9.25 points, or 0.7 percent, to close at 1,319.44. The broad market index remain lower for the month, down 0.6 percent.
The Nasdaq rose 26.21 points, or 0.96 percent, to close at 2,756.89. The tech-heavy index is also lower for the month, down 0.9 percent. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell to nearly 18.
Among key S&P 500 sectors, telecom, energy and materials gained.
Very few trades are taking place except among institutional investors shifting asset allocations before the quarter ends, according to Todd Schoenberger, managing director, LandColt Trading.
Retail investors have looked at the disaster in Japan, fighting in Libya, rising oil prices, and inflation, and "are nervous to make additional moves into equities," Schoenberger said. But even institutional investors are only doing what they to do. "You know things are a little chaotic when the uncertainty factor starts to move into the institutional space," he said.
The reason stocks continue rise even in the face of bad economic news and global uncertainty is traders know the Federal Reserve will continue to pump money into the economy through its second round of stimulus spending, known as quantitative easing or QE2, he added.
Earlier this session, for instance, traders received news that the Case-Shiller index of home prices continued to drop in major metropolitan areas, and consumer confidence sank in March.
"Consumer confidence and Case-Shiller should have been enough to send stocks lower, forget about the geopolitical tension in the world," Schoenberger said. "Yet, traders push equities higher realizing that negative data is a good thing as long as we have the Fed watching our backs."
The fact there is so much uncertainty and fear in the markets is one reason why Mickey Cargile, founder and managing partner of WNB Private Client Services and Cargile Investments, is encouraging his clients to invest in stocks, particularly large-cap U.S. equities.
"When you are extremely confident is the time you need to pull back," Cargile said. "When there is something out there that creates fear, that will create an opportunity to invest."
Cargile prefers large caps, as bigger companies are likely to benefit the most as the economy strengthens. In particular, he likes companies that have achieved scale internationally, like Caterpillar , and companies in the natural gas business, in part because prices for natural gas companies are depressed.
"I believe the nuclear discussion will shut down, and that will push future development toward natural gas," Cargile said. "I just think there’s no alternative."
Energy stocks were mostly higher across the board. Halliburton traded slightly higher despite news that the conflicts in the Middle East, particularly sanctions on Libya, hit first quarter profits by three or four cents a share. Similarly, rival Schlumberger rose more than 4 percent a day after delivering quarterly results that it also said could be hurt slightly by global turmoil.
Also on the energy front, Susquehanna and Barclays upgraded and raised their price targets on a handful of firms. Chesapeake Energy gained after Susquehanna raised its rating on the firm to "positive" from "neutral" and raised its price target to $42 from $34.
Barclays raised its price target on Anadarko, Apache, Devon Energy, Noble Energy and Occidental Petroleum.
On the earnings front, Lennar fell after the homebuilder reported a 12 percent drop in new orders and slumping revenue. Other homebuilders slipped including D.R. Horton and Beazer Homes .
Meanwhile, Home Depot got a boost from news it planned to buy back $1 billion in stock. The home improvement retailer will use proceeds from a $2 billion debt offering.
Wal-Mart was in U.S. Supreme Court today to argue that a class action suit brought by female employees should be stopped. The suit is the largest class action sex discrimination suit in history. Shares of the giant discount retailer traded flat.
Elsewhere, Amazon.com rose slightly after news the online retailer would offer a cloud-basedmusic storage service.
Eastman Kodak slumped after news the U.S. International Trade Commission said it would review a patent decision that ruled Apple and did not infringe Kodak's digital camera patents.
Meanwhile, Nokia filed a new infringement complaint against Apple, saying nearly all of Apple's hardware products infringe on Nokia patents.
Also in tech, Cisco rose slightly after news the network provider was planning to buy newScale, a software company specializing in cloud computing.
On the M&A front, General Electric fell slightly after news it plans to buy a 90 percent stake in Converteam for about $3.2 billion. Converteam is an electrical equipment developer based in France.
Hertz declined after news private equity funds holding stock in the rental company would sell 50 million shares to the public.
And Lululemon Athletica shares jumped after news the athletic apparel maker's board approved a two-for-one stock split.
Meanwhile, Treasury prices slippedafter the government auctioned $35 billion of 5-year notes, which had a high yield of 2.260 percent and bid-to-cover of 2.79. The government is expected to auction 7-year notes on Wednesday. Meanwhile, the 10-year Treasury note's yield rose to 3.49 percent.
In U.S. economic news, home prices fell 3.1 percent year-over-year in January, according to the Case Shiller Home Price Index. The fall was slightly less than expected by economists surveyed by Reuters. According to Case Shiller, home prices fell in most major U.S. cities. For the month, index of 20 metropolitan areas fell 0.2 percent in January from December.
Consumer confidence dropped in March to 63.4 from a revised 72.0 in February, the Conference Board reported on Tuesday. Economists surveyed by Reuters had expected the index to fall to 65.0, according to a median forecast.
Last night President Obama defended his case for military interventionin a televised address, saying the U.S. intervened to prevent a massacre of civilians.
Obama said, however, however that the nation wouldn't get bogged down trying to topple Muammar Gaddafi. Many lawmakers have accused the President of failing to explain the U.S. role in the air assault.
Muammar Gaddafi’s forces fired heavy weapons at rebels overnight and retook a small town east of Sirte, Gaddafi’s birthplace and a military base.
Oil prices rose slightly, as U.S. light sweet crude closed above $104 a barrel and London Brent crude closed above $115. Meanwhile, gold closed at $1,416 an ounce.
In Europe, Standard & Poor's cut Portugal's credit ratingfor the second time in less than week, pushing it almost to the level of "junk." Portugal is in the midst of a political crisis in the wake of Prime Minister Jose Socrates' resignation over parliament's failure austerity measures he backed.
France, a survey showed a majority of citizens still support nuclear energy despite the disaster in Japan.
President Nicolas Sarkozy visits Japan later this week after Tokyo Electric Power, which operates the stricken Fukushima plant, requested help from French nuclear companies including EDF and Areva. He will be the first foreign leader to visit since earthquake and subsequent tsunami on March 11.
Coming Up This Week:
WEDNESDAY: Mortgage applications, Challenger job-cut report, ADP employment report, oil inventories, seven-year Treasury note auction, farm prices, Wal-Mart international investor conference; earnings from Family Dollar before-the-bell and Mosaic after-the-bell; Bullard and Hoenig speak.
THURSDAY: Weekly jobless claims, Chicago PMI, factory orders, money supply; Lacker speaks, Tarullo speaks.
FRIDAY: Auto sales, nonfarm payroll report, ISM manufacturing index, construction spending; Plosser speaks.
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