Dow Beats Doomsayers

Stock traders shrugged off the long weekend deluge of apocalyptic subprime mortgage articles as the Dow Jones Industrial Average and the Dow Jones Transportation Average rose to new all-time highs Tuesday.

"Things just look good," says Michael Driscoll, head of sales and trading at Bear Stearns. "It is worrisome to me when Barron's says everything is comfortable, but I can't shoot holes in it at all."

The Dow industrials gained 0.2% Tuesday to close at 12,786.72, while the S&P 500 gained 0.3% to close at 1459.65. The Nasdaq Composite closed up 0.7% Tuesday to 2513.04.

The Dow was boosted by Wal-Mart(symbol Quote), which jumped 3.7% after the retailer posted strong earnings and provided optimistic guidance for the first quarter of 2007.

Beleaguered Home Depot(HD Quote) slipped only 0.2% on news that its profits fell 28%. The company said the housing market slump hit the company hard, and executives provided a grim outlook for the rest of the year. Still, one might have expected the stock to fall further given the bad news.

After the close, Hewlett Packard(HPQ Quote) reported a 26% jump in profit; the stock was down 1.1% in recent after-hours trading after having risen 0.8% in the regular session.

In a day absent of economic data, Fed Governor Susan Bies' speech about the mortgage industry took center stage. In a speech at Duke University's Fuqua School of Business, Bies said the subprime mortgage lending market is "very problematic," but she noted that the U.S. banking industry is on solid footing.