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Stocks higher after consumer confidence spikes to highest in a year; Dow waffles near 13,000
The Dow Jones industrial average hovered near 13,000 Tuesday morning as uneven economic reports held the stock market's gains in check.
Consumer confidence jumped in February to the highest level in a year. Improved perceptions of the job market pushed the index sharply higher, but the number is still below the level that indicates a healthy economy.
The report, issued at 10 a.m., pushed the Dow Jones industrial average above 13,000, a marker it has broken through repeatedly in the past week during the trading day. The Dow still hasn't closed above that level since May 2008.
The Dow's New Year's rally has faded since the index first cracked the 13,000 milestone last week. It has been trading sideways after gaining 6.5 percent in the first two months of the year. The Standard & Poor's 500 rose 9.1 percent in that time, the Nasdaq 14.6 percent.
Ryan Detrick, senior technical strategist with Schaeffer's Investment Research, said the index often loses momentum after hitting a big, round number, as short-term excitement about the market's rise gives way to more thoughtful analysis.
The Dow has dropped by an average of 0.4 percent in the two weeks after hitting a 1,000-point increment, according Detrick's research on the past 39 such events. The Dow typically gains 0.3 percent over a two-week span.
Detrick believes stocks will keep rising this year as growing economic optimism and market stability draw billions back into the stock market. He said retail investors and hedge funds have invested too little in stocks ' a threat to their performance if stocks rise faster than other investments.
"Two months ago, we were talking about a double-dip recession; now consumer confidence is growing," Detrick said. "A major milestone like 13,000 wakes up a lot of investors who have missed a lot of this rally."
The Dow Jones industrial average rose 20 points, or 0.2 percent, to 13,001 as of 11:10 a.m. Eastern time. The Standard & Poor's 500 index rose 3, or 0.3 percent, to 1,371. The Nasdaq composite index rose 19, or 0.6 percent, to 2,985.
Earlier economic reports were weaker, pushing stock futures lower and leading to a mixed open.
Orders for long-lasting manufactured goods plunged 4 percent last month, the most in three years. Economists expected a drop of just 1 percent.
Much of the decline came from a pullback in business spending on machinery and equipment in January. Spending surged in that category late last year, before a key tax break expired. It fell last month by the most in a year.
The Standard & Poor's/Case-Schiller index of home prices fell in December for a fourth straight month in most major U.S. cities.
Among stocks making big moves:
' Homebuilder Hovnanian Enterprises Inc. rose 1 percent after saying its first-quarter contracts climbed 27 percent and February's numbers remained strong.
' Auto parts retailer AutoZone Inc. gained 2.4 percent after saying its profits increased 13 percent in the most recent quarter.
' Domino's Pizza Inc. surged 10.1 percent after its fourth-quarter profit spiked 28 percent.
Follow Daniel Wagner at ww.twitter.com/wagnerreports.