Dow rise fuelled by McDonald’s lift

THE Dow notched a seventhstraight day of gains yesterday, but light volume suggested that investors don’t believe the more than five-month rally has the legs to keep going.

Surprisingly strong sales by McDonald’s boosted optimism on consumer spending and drove the Dow’s gains on what turned out to be the quietest day of trading so far in 2011, with total volume about 17 per cent below last year’s daily average.

The light volume, “textbook wise, tells you this market is running on fumes,” said Peter Boockvar, equity strategist at Miller Tabak & Co in New York. “But that doesn’t mean it can’t continue.”

Weakness in energy shares limited gains in the S&P 500 and Nasdaq after China, the world’s second-biggest energy consumer, raised interest rates for the second time in six weeks. The move pressured commodities on fears of lower demand but had little market impact outside that sector.

McDonald’s shares surged 2.6 per cent to $75.36 after its January same-store sales beat expectations, led by a rebound in European demand. The S&P consumer discretionary index was up 1.2 per cent and was by far the top performer among S&P sectors.

The Dow Jones industrial average was up 71.52 points, or 0.59 per cent, at 12,233.15. The Standard & Poor’s 500 Index was up 5.52 points, or 0.42 per cent, at 1,324.57. The Nasdaq Composite Index was up 13.06 points, or 0.47 per cent, at 2,797.05.

Just 6.99bn shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year’s daily average of 8.47bn.

In extended trading, Dow component Walt Disney shares jumped 3.2 per cent after it reported forecast-beating first-quarter earnings and revenue, as consumers travelled to its theme parks and businesses bought up ad time on its TV networks.

The S&P energy sector was by far the weakest S&P sector, down 0.5 per cent. US crude for March delivery settled down 0.6 per cent.

Merger activity continued for a second straight day with Kindred Healthcare’s planned acquisition of RehabCare Group to create a post-acute healthcare services company.

Kindred Healthcare jumped 28.3 per cent to $25.00 and RehabCare soared 45.5 per cent to $37.05.

On the downside, US-listed shares of generic drugmaker Teva Pharmaceutical Industries’ fell 5.4 per cent to $52.02 after it reported results that fell short of forecasts. Avon Products posted a steeper-than-expected drop in quarterly profit.