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Dow Continues Historic Run

Robert Holmes

The Dow Jones Industrial Average continued to rewrite the record book, hitting another all-time closing high Thursday and finishing above 11,900 for the first time ever.

After leaping out of the gate, the Dow ended up by 95.57 points, or 0.81%, to 11,947.70. Of the 30 stocks on the index, 21 finished the session in positive territory.

Gains in McDonald's (MCD Quote), Microsoft (MSFT Quote) and Hewlett-Packard (HPQ Quote) were the driving force behind the advance.

Meanwhile, Citigroup (C Quote) and Alcoa (AA Quote) were the main laggards, but both were down less than 1%.

Elsewhere, the S&P 500 rose 12.88 points, or 0.95%, to 1362.83, and the Nasdaq Composite was higher by 37.91 points, or 1.64%, at 2346.18.

Volume was little changed from Wednesday's levels, but breadth drastically improved. About 2.54 billion shares changed hands on the New York Stock Exchange, and volume on the Nasdaq was roughly 2.04 billion shares. Winners beat losers 3 to 1.

Markets moved to their session highs after the Federal Reserve's beige book indicated that "economic activity continued to expand" since the last report in September. For the most part, the survey suggested that the economy wasn't growing at a pace that would be considered too robust.

A number of the Fed's 12 districts said consumer spending increased, and most regions "reported few signs of increased price pressures in recent weeks." Nearly all districts reported that housing market conditions continued to soften.

"The key across the board is moderation, which is what the market loves to see," said Jay Suskind, head of institutional equity trading with Ryan Beck & Co. "Activity wasn't too hot or too cold. The market has been strong all day, but this beige book has given it a further push."

To view Farnoosh Torabi's video take on today's market, click here

After the beige book's release, Treasuries rose, with the 10-year note adding 4/32 in price to yield 4.77%. The 30-year bond was up 1/32 and yielding 4.90%.

The market's upswing was more than erasing the minor selloff from Wednesday that was spurred by disappointing results from Alcoa and Genentech (DNA Quote). As a result, the Dow lost 15.04 points to 11,852.13, and the S&P slipped 3.47 points to 1349.95. The Nasdaq shed 7.16 points to 2308.27.

Another set of profit reports was producing better results this time around. Among the companies with results, warehouse retailer Costco (COST Quote) topped estimates, as did motorcycle maker Harley-Davidson (HOG Quote).

Costco finished the session 7.6% higher to $53.90 and was one of the best performers on the Nasdaq. Harley gained $1.73, or 2.7%, to $64.88.

PepsiCo (PEP Quote) also got past estimates, and the soda and snack maker offered a profit forecast that was in line with expectations. Still, PepsiCo was lower by $1.01, or 1.6%, to close at $62.85.

After the bell Wednesday, Yum! Brands (YUM Quote) posted a 20% rise in third-quarter profits and handily topped Wall Street's earnings expectations. The owner of KFC, Taco Bell and Pizza Hut also raised its full-year forecast. Shares of Yum! were higher $4.51, or 8.3%, to $59.08.

Outside of earnings, real estate concern CB Richard Ellis Group (CBG Quote) saw buying interest after Standard & Poor's said it will replace BellSouth (BLS Quote) in the S&P 500. BellSouth is being acquired by AT&T (T Quote). CB Richard Ellis was up $1.76, or 7.3%, to $25.99.

As for commodities, most were stronger following the Energy Department's weekly petroleum inventory report. Crude stocks rose by 2.4 million barrels last week, and gasoline inventories increased by 300,000 barrels. Distillate stocks, however, fell by 1.6 million barrels.

Oil tacked on 27 cents to close at $57.86 a barrel, but natural gas dropped 37 cents to $5.78 per million British thermal units. Gold rose $3.80 at $580.30 an ounce, while silver tacked on 5 cents to $11.38 an ounce.

Before the bell, the Commerce Department said the U.S. trade deficit reached a record $69.9 billion in August, rising $1.9 billion from the revised July reading. Exports for the month totaled $122.4 billion, and imports were $192.3 billion. August exports were $2.7 billion more than July, and the value of imports rose by $4.6 billion.

"We can't be sure why the consensus was so low, but we guess it reflects the drop in oil prices," said Ian Shepherdson, chief economist with High Frequency Economics. "It takes a month or so for lower oil prices to hit the trade data, and the really big drop did not come until September."

Overseas, equities were mostly higher. London's FTSE added 0.8% to 6121, and Frankfurt's Xetra DAX was up 0.7% to 6160. Tokyo's Nikkei slipped 0.2% to 16,369, and Hong Kong's Hang Seng tacked on 0.1% to 17,873.

On Friday, General Electric(GE Quote) is expected to post third-quarter earnings of 49 cents a share, according to Thomson First Call. Shares ended the session up 5 cents, or 0.1%, to $36.22.

In addition, reports on import prices and retail sales for September are due, as well as the University of Michigan's preliminary read on consumer sentiment for October.