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Dow ekes out another 18-month high

By Alexandra Twin, senior writer

NEW YORK (CNNMoney.com) -- Stocks scratched out slim gains Tuesday, pushing the Dow and S&P 500 to fresh 18-month highs and the Nasdaq to the highest point in almost two years, as economic optimism again lifted equities.

The Dow Jones industrial average (INDU) added 13 points, or 0.1%, ending at 11,019.42, the highest point since Sept. 26, 2008. The S&P 500 index (SPX) was little changed, but nonetheless managed to end at a fresh 18-month high. The Nasdaq composite (COMP) added 8 points, or 0.3%, ending at a new 22-month high.

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After the close, Intel (INTC, Fortune 500) reported higher quarterly sales and earnings that topped expectations, kicking off the tech sector earnings on a positive note. Shares gained nearly 4% after the close.

Select stocks led the mild advance, with consumer and other economically sensitive shares rising. Home Depot (HD, Fortune 500), McDonald's (MCD, Fortune 500), 3M (MMM, Fortune 500) and General Electric (GE, Fortune 500) were among the Dow's bigger gainers.

But any advance was limited by weakness in financial shares, with the KBW Bank (BKX) index losing 1.1%. Alcoa shares were down 3%, and commodity prices and shares slipped.

The Dow first closed above 11,000 Monday after European leaders made $40 billion in loans available to debt-strapped Greece, should the nation need it. Greece's inability to borrow at low rates has raised fears it might default on its debt. But the loan package eased those fears and the euro nation's sale of short-term notes Tuesday drew strong demand.

Investors have been worried that Greece's problems will destabilize the euro and rattle the other debt-burdened PIIGS, Portugal, Italy, Ireland and Spain.

Regardless of these worries, stocks have been on the rise lately, with the major indexes all advancing in seven of the last eight weeks on bets that the economy won't fall into a double-dip recession. Optimism about the quarterly reporting period has also fed stock gains.

Alcoa: The aluminum producer reported a quarterly profit late Monday of 10 cents per share versus a loss of 59 cents per share a year ago. The gain was in line with a consensus of analysts surveyed by Thomson Reuters.

But Alcoa (AA, Fortune 500)'s revenue missed expectations. The Dow component reported revenue of $4.89 billion versus forecasts for $5.238 billion. Alcoa's sales topped $4.147 billion a year earlier.

S&P 500 earnings are expected to have risen 37% versus a year earlier, when the financial crisis hit its nadir and earnings plunged 40%. Revenue is expected to have risen 10% versus a year ago.

JPMorgan Chase (JPM, Fortune 500), Bank of America (BAC, Fortune 500) and Google (GOOG, Fortune 500) are the other big names due later in the week.

Palm: Shares slumped 14.6% in active trading following reports Monday that the troubled company has hired Goldman Sachs and Qatalyst Partners to try and find it a buyer. Palm (PALM) shares had gained 17% Monday.

Trade gap widens: The February trade deficit rose to $39.7 billion in February from a revised $37 billion in January, according to a Commerce Department report released Tuesday morning. Economists surveyed by Briefing.com thought it would widen to $38.5 billion.

Both exports and imports rose following the January decline, but the increase in imports topped that in exports, causing the deficit to rise.

World markets: In overseas trading, European markets fell, with London's FTSE down 0.3%, France's CAC 40 down 0.4% and Germany's DAX down 0.3%. Asian markets slipped too, with the Hong Kong Hang Seng down 0.2% and the Japanese Nikkei down 0.8%.

Bonds: Treasury prices rallied, lowering the yield on the 10-year note to 3.82% from 3.85% late Monday. The 10-year had risen as high as 4% a week ago, an 18-month high. Treasury prices and yields move in opposite directions.

The dollar and commodities: The dollar fell versus the euro and against the yen.

COMEX gold for June delivery fell $8.80 to settle at $1,153.40 per ounce.

U.S. light crude oil for May delivery fell 29 cents to settle at $84.05 a barrel on the New York Mercantile Exchange.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by a narrow margin on volume of 1.06 billion shares. On the Nasdaq, advancers topped decliners by a narrow margin on volume of 2.56 billion shares.  To top of page

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Index Last Change % Change
Dow 16,776.43 304.06 1.85%
Nasdaq 4,781.26 73.49 1.56%
S&P 500 1,987.05 35.69 1.83%
Treasuries 2.06 0.07 3.37%
Data as of 2:18am ET
Company Price Change % Change
General Electric Co 26.82 1.35 5.30%
Dow Chemical Co 46.31 1.86 4.18%
Bank of America Corp... 15.69 0.31 2.02%
Micron Technology In... 17.57 1.66 10.43%
Apple Inc 110.78 0.40 0.36%
Data as of Oct 5


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