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Dow Record Bid Falls Short

Robert Holmes

The Dow Jones Industrial Average moved nearer to setting a record high Wednesday, but the index, pressured late by rising oil prices, ended about 30 points shy of its best-ever close.

By adding 19.85 points, or 0.17%, to 11,689.24, the Dow had the second-highest finish in its history. The S&P 500 ticked up 0.25 point, or 0.02%, to 1336.59, and the Nasdaq Composite ended ahead by 2.05 points, or 0.09%, to 2263.39, having been up by as many as 15 points earlier.

For the Dow, its top close was just below 11,723 on Jan. 14, 2000. The all-time intraday mark of around 11,752 was set two days before the record finish.

Though the index ventured above 11,700 during the session, jumping crude futures put a dent in the rally. Oil traded up $1.95 to $62.96, despite the Energy Department's weekly inventory report that showed a less-than-expected drawdown in oil inventories. Both distillate and gasoline inventories rose last week.

"Considering the fact we're pressing news highs, it's good to see we can continue to scratch more upside," said Art Hogan, chief market analyst with Jefferies. "It shows that there's more good news than bad news, even with energy prices rising today. We'd like to have friendly economic data and lower energy prices remain as we head into earnings season."

Helping matters in recent sessions has been the coming end of the third quarter. Experts say some money managers use the end of the quarter as a time to buy stocks that have been working for the past few weeks in a bid to boost the returns on their portfolios.

To view Gregg Greenberg's video take on today's market, click here.

"Blue chips are getting most of the attention, driving the S&P 500 and Dow to new bull-market high ground," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "This rally is more about putting excess cash to work rather than expectations for growth."

Advances of 2% or more in McDonald'sMCD, General MotorsGM, AltriaMO and IntelINTC helped keep the Dow positive.

On the Nasdaq, Marvell TechnologyMRVL was higher by 4.5%, but couldn't save the Philadelphia Semiconductor Sector index, which fell 0.7%.

As for the day's economic reports, the Commerce Department said durable-goods orders unexpectedly fell 0.5% in August, compared with economists' expectations of a 0.4% rise. Excluding transportation, durable goods orders fell 2%. July's decline of 2.4% was revised to a drop of 2.7%.

Separately, the Commerce Department said new-home sales rose 4.1% to 1.05 million annualized units in August, just above the consensus. However, July new-home sales were revised down by 63,000 to just 1.01 million units. Both May and June sales data were revised lower, as well.

"It's a surprise the market is acting as well as it is," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "We've been able to shake the economic data off, and we continue to hope we're in store for a soft landing. There is certainly a lot of interest in stocks, but I'm concerned about the bond market and forthcoming earnings reports."

To view Gregg Greenberg's video take on today's market, click here.

The 10-year note was down 3/32 in price, yielding 4.60%, and the dollar pared gains against other major world currencies. Gold closed higher by $6.20 to $603.30 an ounce, and silver gained 20 cents to $11.70 an ounce.

About 2.75 billion shares changed hands on the New York Stock Exchange, and advancers beat decliners by a 4-to-3 margin. Volume on the Nasdaq was 2.08 billion shares, with winners topping losers 8 to 7.

After the prior close, Jabil Circuit JBL offered an upbeat forecast, saying first-quarter revenue should be $3.1 billion to $3.3 billion, above analysts' consensus estimate. The company also said it expects revenue growth of about 20% for fiscal 2007, suggesting a top line of around $12.36 billion. Jabil rose $1.07, or 3.8%, to finish at $28.96.

The same couldn't be said for Red Hat RHAT, whose shares tumbled after the Linux software distributor said cash flow and net income dropped sharply in the second quarter and indicated that sales in the third quarter may be slightly below expectations. Red Hat faced three separate downgrades from brokerage firms Wednesday, and its shares plummeted 23.2% to $20.21.

Elsewhere, another Vioxx case has been decided, this one in favor of the painkiller's maker Merck MRK. A federal jury found that the company wasn't responsible for a Kentucky man's heart attack. The case was the 10th to be decided, and the fifth one that Merck has won. Merck added 64 cents, or 1.5%, to $42.40.

To view Gregg Greenberg's video take on today's market, click here.

Among ratings changes, Citigroup upgraded SunocoSUN, ValeroVLO and Marathon OilMRO to buy from hold.

Elsewhere, Morgan Stanley raised its rating for apparel retailer GapGPS to overweight from underweight. Shares jumped by 57 cents, or 3.1%, to $19.07.

Overseas, Europe's equities moved higher. London's FTSE 100 added 1% to 5930, and Frankfurt's Xetra DAX rose 0.5% to 5989. Asia's shares also surged, with Tokyo's Nikkei ending higher by 2.5% to 15,948 and Hong Kong's Hang Seng rising 1.2% at 17,521.

To view Gregg Greenberg's video take on today's market, click here.