Stocks extend gains to fourth straight day
NEW YORK -- Investors slowed their move into the market from a sprint to a walk.
Stocks tacked on modest gains Tuesday to extend a rally to a fourth day following a strong rise in pending home sales, the latest encouraging signal for the troubled housing market.
The Dow Jones industrial average briefly pushed into the black for 2009 but ended 35.5 points below the break-even mark. In March, the blue chips were down 25.4% for the year.
A slump in financial shares kept overall buying in check as several big banks said they would sell more stock to repay federal bailout money. The modest moves followed huge gains on Monday, when indicators jumped more than 2% on positive signs for manufacturing and other good economic signals.
The main driver of stock gains was a report showing the biggest jump in nearly eight years in pending home sales for April, however some market watchers worried that the sudden gains since last week may be overdone.
"The fear is that we're unable to tell whether we have green shoots sprouting or weeds popping up through cracks in the concrete," said Lawrence Creatura, portfolio manager at Federated Investors in Rochester, N.Y. He was referring to early positive signs in the economy that Federal Reserve Chairman Ben Bernanke has called "green shoots."
The Dow rose 19.43, or 0.2%, to 8,740.87. The Dow at times traded above 8,776.39, its finish for 2008. While it remains down moderately for the year, the Dow is up 5.3% in four days, a gain that could otherwise take months to achieve.
The broader Standard & Poor's 500 index rose 1.87, or 0.2%, to 944.74, and the Nasdaq composite index rose 8.12, or 0.4%, to 1,836.80. Both indexes are up for 2009.
Financial stocks mostly lost ground as several banks said they would sell shares to raise capital. Adding to their share base can dilute the value of existing shares.
Morgan Stanley said it will raise $2.2 billion in common stock offering, after JPMorgan Chase. and American Express announced similar plans late Monday. JPMorgan will offer $5 billion of common stock, while American Express is seeking to raise $500 million.
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