Stocks build on recent rally with moderate gains
NEW YORK -- Wall Street extended its gains into a fourth session today, rising moderately after President-elect Obama soothed investors by pledging he would have a plan to deal with the nation's economic crisis on his first day in office.
Stocks that had fallen in early trading on reports of more economic weakness turned higher after Obama stated, "Help is on the way." He spoke as he filled more spots on his economic team.
There was still caution in the market, however, not surprising since Wall Street is coming off three sessions of gains that gave the Dow Jones industrials and the Standard & Poor's 500 index their first triple-session advances in more than two months. Traders were also cautious ahead of what is essentially an extended Thanksgiving holiday weekend; the market is closed Thursday and will have an abbreviated session Friday.
Obama's remarks were calming after the day's economic reports. The Labor Department said initial requests for unemployment benefits fell to a seasonally adjusted 529,000 from the previous week's upwardly revised figure of 543,000. That is lower than analysts' expectations of 537,000. Still, the initial claims remain at recessionary levels.
Meanwhile, the Commerce Department said orders to U.S. factories for big-ticket manufactured goods plunged in October by the largest amount in two years as the economy weakened. The 6.2 percent drop was more than double the 3 percent decline economists expected.
It also reported that sales of new homes fell 5.3 percent in October to the lowest level in nearly 18 years. The seasonally adjusted annual sales pace of 433,000 homes was the lowest level since January 1991, when the country was facing another steep housing downturn.
Americans also cut back on their spending in October by the largest amount since the 2001 terror attacks. The Commerce Department said consumer spending plunged by 1 percent last month, worse than the 0.9 percent decline that had been expected. The report also said personal incomes rose 0.3 percent last month, more than the 0.1 percent gain analysts had predicted.
Analysts said some of the turnaround was also due to the fact that the economic news was expected to be bad.
