Dow heads to highs ahead of key speech

US STOCKS closed modestly higher yesterday, putting the Dow within striking distance of an all-time high, as investors looked ahead to President Barack Obama’s State of the Union address.

Investors will be listening to Obama’s speech for any clues on a deal with Republicans to avert automatic spending cuts due to take effect on 1 March.

The tone of the speech will also be scrutinised, with any sign of compromise likely to be warmly received.

About 5.73bn shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT yesterday, below the daily average so far this year of about 6.48bn shares.

The White House has signalled Obama will urge investment in infrastructure and clean energy, suggesting companies in those sectors may be volatile in today's session.

The Dow Jones industrial average was up 47.46 points, or 0.34 per cent, at 14,018.70. The Standard & Poor’s 500 Index was up 2.42 points, or 0.16 per cent, at 1,519.43. The Nasdaq Composite Index was down 5.51 points, or 0.17 per cent, at 3,186.49.

Housing shares were among the strongest of the day, led by a 12.5 per cent jump in Masco to $20.02 after the home improvement product maker said it expects new home construction to show strong growth in 2013. The PHLX housing sector index rose 3.7 per cent.

Avon Products surged 20 per cent to $20.79 as the S&P 500’s top percentage gainer after the cosmetics company reversed sales declines and cut costs.

On the downside, Coca-Cola fell 2.7 per cent to $37.56 and was the biggest drag on the Dow after reporting revenue below estimates, hurt by a weaker-than-expected performance in Europe.