US stocks rose for a third day yesterday, led by utilities and other defensive sectors that may drive further gains as investors bet on profit growth and set aside concerns about weakening demand.
For now the equity market is filtering out potential problems involving Eurozone debt and speculation that the recent selloff in commodities is a harbinger of weak economic growth.
“The market has absorbed most of the negative news to date and should push higher based on the fact investors are focused on earnings recovery and growth,” said Jay Leupp, partner at San Mateo, California-based Grubb & Ellis, which oversees more than $2bn in assets.
The leading S&P 500 sector was utilities, which rose 1.3 per cent yesterday. Though considered a low-growth sector, utilities have risen 5.4 per cent since 8 April when the recent slide in US bond yields began.
News of a trade surplus in China supported the market, easing fears about slow global growth.
Microsoft was an outlier among index leaders, losing 0.6 per cent to $25.67 after announcing it plans to buy Internet phone service Skype for $8.5bn in cash, a price some believe is too expensive.
Shares of eBay, which has a stake in Skype, rose 2.5 per cent to $33.93.
The Dow Jones industrial average was up 75.68 points, or 0.60 per cent, at 12,760.36. The Standard & Poor’s 500 Index was up 10.87 points, or 0.81 per cent, at 1,357.16. The Nasdaq Composite Index was up 28.64 points, or 1.01 per cent, at 2,871.89.
After the closing bell, shares of Walt Disney were down 2.8 per cent at $42.70 after it reported revenue that missed expectations. [
The S&P 500 is off 0.5 per cent since the start of the month but remains just below recent highs for the up trend. Its May 2 intraday level was the highest since early June 2008.
“In the very short term, if we close above 1,354, which is the highs from three days ago, that might lead us higher in a constant pattern up to 1,370 soon,” said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
Boston Scientific was the most heavily traded stock on the Big Board after chief executive Ray Elliot said he will step down at the end of 2011. The surprise announcement sent shares of the medical device maker down 8.9 per cent to $7.02.
Among advancers, Dean Foods jumped 11.5 per cent to $12.24 after posting higher-than-expected profit.
About 6.6bn shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq.