Dow Tops 9000; Nasdaq Rolls On

PETER A. MCKAY GEOFFREY ROGOW

Good news about profits and housing sparked a broad-based stock rally on Thursday, with the Dow Jones Industrial Average gaining nearly 200 points and moving above 9000 for the first time since January.

The blue-chip average gained 188.03 points, or 2.1%, to 9069.29, its highest closing level since Nov. 5. The Dow has now risen in 12 of 16 trading days this month and is up 7.4% for the month thus far. The benchmark has risen 38.52% from its 12-year closing low of 6547.05 hit on March 9 and is 35.97% from its record close of 14164.53 hit on October 9, 2007.

Among the Dow's components, AT&T rose 2.6% and 3M rose 7.3%. Both posted declines in second-quarter profits that were smaller than expected. Microsoft climbed 3.1% and American Express rose 2.4%. They are due to report after the closing bell.

Upbeat earnings reports have been the key driver of the Dow's recent march.

"The early part of this rally was clearly short covering going into earnings season. The market was big-time held short and with the lack of bad news, the path of least resistance has been up," said Kevin Kruszenski, director of equity trading for KeyBanc Capital Markets. "People have been so trained to buy weakness but now they're being forced to chase their long ideas."

The S&P 500 rose 22.22 points, or 2.3%, to 976.29, helped by gains in every sector. The broad measure is up 6.2% so far this month and has risen in seven of the last nine sessions.

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The rally began early in the trading day after the National Association of Realtors said existing-home sales rose again in June. An exchange-traded fund tracking the S&P 500's homebuilders rose 4.8% following the report. KB Home was up 6.5%, Pulte Homes was up 4.4%, and Toll Brothers was up 5.8%.

A better-than-forecast report on claims for unemployment benefits also added fuel to the rally. The Labor Department said initial jobless claims climbed by 30,000 to 554,000 last week, less than economists, on average, expected. The tally of continuing claims fell by 88,000 to the lowest level since April 11.

Cyclical sectors like technology rallied. The Nasdaq Composite Index rose 47.22 points, or 2.5%, to 1973.60, its 12th straight day of gains. The tech-heavy measure hasn't recorded a winning streak of that length since the 13 day-stretch ending Jan. 9, 1992. The Nasdaq has risen 13% over its 12-day run.

EBay rose 11% after the online auctioneer said current-quarter results would top analyst estimates. Rival online retailer Amazon.com gained 5.7% after striking a deal to acquire online shoe retailer Zappos.com, but its shares were moving lower in after-hours trading after it posted a 10% drop in earnings.

The health-care sector also rallied as Bristol-Myers Squibb posted better-than-expected results and said that it plans to buy Medarex for $2.4 billion. Bristol-Myers shares rose 2.8% and Medarex leapt 89%.

President Barack Obama's press conference Wednesday evening regarding proposed health-care legislation also appeared to help the sector. Traders have been betting that the package will be delayed and may not effectively control costs, leaving room for health-care providers to make solid profits.

"The sector has been really sensitive to the policy news for about six months or so," said trader Todd Leone, of Cowen & Co. "But it's been acting a lot better the longer they seem to be pushing the thing off."

Shares of Ford Motor rose 9.4% after the auto maker said that it had returned to profitability in its second quarter and slowed its cash burn.

The dollar strengthened against the Japanese yen but fell versus the euro.

Treasury prices sank. The two-year note was down 6/32 to yield 1.035%. The 10-year note fell 1 7/32 to yield 3.697%.

Some market veterans said that stocks could yet suffer a correction thanks to persistent weakness in employment and corporate revenue even as profits have been ticking higher.

Doreen M. Mogavero, chief executive of the New York floor brokerage Mogavero, Lee & Co., was busy executing customers' orders to buy shares on Thursday, but said she remains wary that the Dow could yet tumble to 8600 or so.

"If I get an order from a client, i have to go with the momentum," Ms. Mogavero said. "But my opinion is still that I'm not convinced this rally is really sustainable. Where is the [economic] growth supposed to come from?"