Stocks rose Wednesday, lifting the Dow Jones industrials past 12,700 for the first time after Wall Street welcomed a robust sales forecast from Cisco Systems Inc. and a stronger-than-expected productivity reading.
The Cisco forecast gave a boost to technology stocks, while the Labor Department's productivity figures were stronger than expected for the fourth quarter. Productivity grew at a 3 percent annual rate, nearly double what Wall Street expected and the agency also reported that wage pressures eased somewhat in the last three months of the year.
"This economy just keeps moving along. Stocks overall are still reasonably priced and obviously there's a lot of money on the sidelines that wants to come in," said Al Goldman, chief market strategist with A.G. Edwards & Sons.
In early afternoon trading, the Dow rose 29.72, or 0.23 percent, to 12,696.03. The Dow rose as high as 12,700.28, passing a previous trading record of 12,683.93 set Friday.
Broader stock indicators also moved higher. The Standard & Poor's 500 index was up 4.74, or 0.33 percent, at 1,452.74, and the tech-focused Nasdaq composite index, responding to Cisco's news, rose 23.16, or 0.94 percent, to 2,494.65.
Bonds rose following the economic data, with the yield on the benchmark 10-year Treasury note falling to 4.74 percent from 4.77 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude rose 26 cents to $59.14 per barrel on the New York Mercantile Exchange, lifted slightly after the Energy Department's weekly domestic inventory data showed a small decrease in crude stockpiles.
"I think that people are slowly but surely becoming aware of the fact that if we had any kind of a landing it was a soft landing. I'm not even sure we can call it a landing," Goldman said of the economy. "I think people who have been disbelievers in this market for years are starting to believe."
Investors found encouragement in the productivity data because it suggested employers could extract more work from employees and stave off the need to add workers in a tight labor market. Employers forced to compete for workers would likely have to raise pay and other benefits. Such a prospect would draw concern on Wall Street as the Fed remains watchful of an increase in wage inflation.
Last week, the Fed left rates unchanged for the fifth straight time, interrupting a string of 17 straight increases than began in 2004. In comments accompanying the decision, the Fed said inflationary pressures appeared to be in check though still a concern. After an initial burst higher following the comments on inflation, stocks have shown little movement as bullish investors try to build resolve to move higher.
The productivity data seemed to overshadow comments from Philadelphia Fed President Charles Plosser that an improving economy might force the central bank to raise short-term interest rates. Plosser said the productivity gains were helping consumers but that it was too soon to declare the threat of inflation neutralized.
In corporate news, Cisco rose $1.16, or 4.2 percent, to $28.44 after the networking equipment maker predicted its third-quarter revenue would rise 19 to 20 percent.
News Corp. added 60 cents, or 2.5 percent, to $24.75 after the media conglomerate's fiscal second-quarter earnings fell from those of a year ago, which benefited from a gain on an asset sale. The company's box office earnings rose on several hits including the "Borat" movie. Earnings were stronger than expected and the stock set a new 52-week high of $25.35, topping an earlier high of $24.52.
Multi-Fineline Electronix Inc., which makes circuit boards, rose $3.26, or 18.5 percent to $20.84 although its fiscal first-quarter profit came in below Wall Street's expectation. Some analysts suggested the company's revenue had hit a low point.
Appliance maker Whirlpool Corp. saw its fourth-quarter earnings fall 14 percent as it recorded a loss from discontinued operations. The stock fell $2.85, or 3 percent, to $92.05. DirecTV Group Inc. rose $1.63, or 6.8 percent, to $25.60 after the satellite television operator's fourth-quarter profit more than doubled after its subscriber base grew and it changed its accounting for set-top boxes.
Cheesecake Factory Inc. fell 79 cents, or 2.9 percent, to $26.97 after the restaurant chain's fourth-quarter profit fell 9 percent amid compensation charges and increased operating costs.
Advancing issues outnumbered decliners by about 5 to 3 on the New York Stock Exchange, where volume came to 753.59 million shares.
The Russell 2000 index of smaller companies was up 4.78, or 0.59 percent, at 815.19.
Overseas, Japan's Nikkei stock average closed down 0.66 percent. Britain's FTSE 100 closed up 0.37 percent, Germany's DAX index was up 0.58 percent, and France's CAC-40 finished up 0.46 percent.
Published by Tim Paradis, AP Business Writer
Labels: CAKE, CSCO, Dow Jones, DTV, Hot Stocks, MFLX, NWS, WHR
