Dow advances 36.08 points despite mixed economic news
NEW YORK — The stock market showed some signs of stability Tuesday despite mixed economic news.
Investors were encouraged after the Treasury Department and the Federal Reserve said they planned to provide $800 billion to help unfreeze the market for consumer debt and to make mortgage loans cheaper and more available.
And, ahead of the holiday shopping season, investors got some good news about consumers. The Conference Board said its Consumer Confidence Index unexpectedly rose to 44.9 in November, up from a revised 38.8 in the previous month. Last month’s reading was the lowest since the research group started tracking the index in 1967. Economists had expected the index to slip to 37.9.
But the Commerce Department said third-quarter gross domestic product declined at a 0.5 percent annual rate, outpacing the 0.3 percent first estimated a month ago. Still, Wall Street had expected the number would worsen, so the report didn’t catch the market by surprise. It was the worst reading since growth fell at a 1.4 percent pace in the third quarter of 2001, which was during the last recession.
American consumers — the lifeblood of the economy — slashed spending in the third quarter at a 3.7 percent pace. That was deeper than the 3.1 percent cut initially reported and marked the biggest reduction since the second quarter of 1980, when the country was in the grip of recession.
Meanwhile, the Federal Deposit Insurance Corp. said the list of banks it considers to be in trouble shot up nearly 50 percent to 171 during the third quarter — the highest level since late 1995.
The FDIC also said that commercial banks and savings institutions suffered a 94 percent drop in third-quarter profits to $1.7 billion. Except for the fourth quarter of 2007, it was the lowest profit since the fourth quarter of 1990.
Also Tuesday, a report on home prices and downbeat earnings results from home-builder D. R. Horton showed further deterioration in the housing market. The Standard & Poor’s/Case-Shiller U. S. National Home Price Index said that home prices tumbled a record 16.6 percent during the third quarter from the same period a year ago. Prices are at levels not seen since the first quarter of 2004.
The Dow Jones industrial average rose 36.08 points, or 0.43 percent, to 8,479.47, its first three-day advance in nearly three months.
The Standard & Poor’s 500 index rose 5.58, or 0.66 percent, to 857.39. The Nasdaq composite index fell 7.29, or 0.50 percent, to 1,464.73.
Still, advancing issues were ahead of decliners on the Nasdaq Stock Market by 5 to 4. On the New York Stock Exchange, advancers were ahead by more than 2 to 1 on consolidated volume of 6.72 billion shares, compared with 7.65 billion on Monday.
The Russell 2000 index of smaller companies rose 6.38, or 1.46 percent, to 443.18.
Overseas, Japan’s Nikkei stock average rose 5.22 percent. Britain’s FTSE 100 rose 0.44 percent, Germany’s DAX index rose 0.13 percent, and France’s CAC-40 rose 1.18 percent.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.10 percent in late trade from 3.33 percent on Monday. The yield on the three-month T-bill rose to 0.09 percent from 0.01 percent late Monday.
The dollar was mixed against other major currencies, while gold prices fell. Light, sweet crude fell $3.73 to settle at $50.77 a barrel on the New York Mercantile Exchange.
Starbucks fell 38 cents to $8.08 after it warned in a regulatory filing late Monday it expects sales to continue to weaken, at least through the end of the fiscal year.
Hewlett-Packard Co. on Monday posted fiscal fourth-quarter earnings that topped Wall Street’s forecast, but on Tuesday shares fell 24 cents to $8.21 after analysts said they remain concerned about how the company will fare during the recession.
D. R. Horton jumped $1.90 to $6.90. While the struggling homebuilder’s quarterly revenue plunged 44 percent on tough industry conditions, it still beat expectations.
Rio Tinto tumbled $39.90 to $106.09. BHP Billiton Ltd., the world’s biggest mining company, ended a hostile $68 billion takeover bid for its rival due to a tough economy and lower metals prices.
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