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- Schnucks bans solicitors, including organizations like Salvation Army (8/24/16)38
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Stocks up in anticipation of Greenspan testimony
NEW YORK -- Investors cautiously bid stocks higher Tuesday, pleased by growth in retail sales but wary about Federal Reserve chairman Alan Greenspan's congressional testimony starting today. The Dow Jones industrials and Standard & Poor's 500 index reached new 2005 highs.
Wall Street welcomed the Commerce Department's report that overall retail sales fell 0.3 percent in January, less than the 0.5 percent expected. Taking sluggish auto sales out, retail sales rose 0.6 percent, also better than expected.
Some investors, however, remained hesitant prior to Greenspan's take on the economy and monetary policy, coming today and Thursday on Capital Hill. While most on Wall Street expect Greenspan to reiterate the Fed's current stance, calling for measured interst rate increases, some analysts believe the markets' recent gains may prompt Greenspan to sound a cautionary note.
"Greenspan has a history of using this meeting to try to curb the market," said Bill Groenveld, head trader for vFinance Investments. "I wouldn't be surprised if you end up seeing him making a statement that we weren't expecting. The way long-term rates are going, he may have to shake things up a bit."
Volume was somewhat light due to concerns over Greenspan's testimony, but some analysts took comfort in the fact that the major indexes did not give back their gains over the past two weeks.
"You've had the market holding its ground in these slow days, and that could be encouraging to traders," said Brian Williamson, equity trader with The Boston Company Asset Management. "I think that's helping to restore confidence and push things along."
While the major indexes showed modest gains, merger news drove individual stocks.
Investors welcomed reports that a private investment firm has made an unsolicited bid for struggling electronics retailer Circuit City Stores Inc. Circuit City surged $2.30, or 16.2 percent, to $16.53 after Highfields Capital Management LP made a $3.25 billion bid for the retailer. The company's board said it will carefully evaluate the $17-per-share proposal.
Highfields said it wants to take Circuit City private in order to be more aggressive in making changes to improve the electronics chain.
But talks between Federated Department Stores Inc. and May Department Stores Co. have broken down, according to The Wall Street Journal, after the two could not agree on a final price for May. Shares of May rose 19 cents to $32.05, while Federated rose 75 cents to $58.
Qwest Communications International Inc. added 6 cents to $4.04 after the telecom company reported a narrower-than-expected fourth-quarter loss. The company credited stronger broadband Internet sales and sales of bundled products for the improvement. The company did not discuss any merger or acquisition plans after its failed bid for MCI Inc.
Medco Health Solutions Inc. said increased use of generics and mail-order offers helped the pharmacy benefits manager cut costs and increase fourth-quarter profits. The company beat Wall Street estimates by 2 cents per share. Medco was up 89 cents to $44.69.
Advancing issues outnumbered decliners by nearly 5 to 4 on the New York Stock Exchange, where consolidated volume came to 2 billion shares, compared with 1.68 billion on Monday.
The Russell 2000 index of smaller companies was down 0.08, or 0.01 percent, at 634.94.
Overseas, Japan's Nikkei stock average rose 0.12 percent. In Europe, Britain's FTSE 100 closed up 0.34 percent, France's CAC-40 climbed 0.46 percent for the session, and Germany's DAX index gained 0.36 percent.
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