Nasdaq joins the party
After holding back a bit in the latest leg of the rally, the tech-fueled composite takes the lead, knocking out its 2006 high and ending at its best point in 5-1/2 years; S&P 500 at an almost 6-year high; Dow at a new record, again.
NEW YORK (CNNMoney.com) -- Falling oil prices and rallying tech shares recharged the rally Thursday, pushing the Dow to another record high, the S&P 500 to an almost 6-year high and the Nasdaq to its highest point in 5-1/2 years.
The tech-fueled Nasdaq composite (up 20.51 to 2,377.10, Charts) nearly 1 percent, according to early tallies, taking out its 2006 closing high and ending at its highest point since February 2001.
The Dow Jones industrial average (up 28.50 to 12,163.18, Charts) added 0.2 percent, closing at a new record high, after touching a new trading high of 12,165.26 in the afternoon. The blue-chip barometer has now closed at a new record for 13 of the last 18 sessions.
The broader S&P 500 (up 6.54 to 1,388.76, Charts) index added around 0.5 percent, ending at the highest point since November 2000.
"It's been a steady increase since the morning," said Joseph Saluzzi, co-head of equity trading at Themis Trading. "We sold off after the housing number, but since then we've stepped up nicely, with oil prices falling and technology leading."
Saluzzi said that in general, he thinks the upward trend should continue. "The rally isn't real because it's taking out new records on the Dow, it's real because of the fundamentals," he said, including the earnings and the sense that the economy is growing at a good pace to sustain earnings, but not push inflation higher.
Here's what was influencing stocks near the close.
New home sales disappoint
New home sales rose a surprisingly strong 5.3 percent in September. However, the median price of a new home slumped 9.7 percent from a year earlier, showing that the gains in overall sales were likely reflective of builders having to offer big price cuts.
Investors are worried that if the housing market collapses too rapidly, that will intensify the economic slowdown.
Tempering the impact of the housing reading was a report showing a much stronger-than-expected jump in durable goods orders in September.
"The housing number was concerning, but I don't think there's an economic scenario right now that's going to upset the stock market," said Barry Hyman, equity strategist at EKN Financial Services.
Hyman was referring to the extremely bullish sentiment regarding the economy that seems to be in place on Wall Street at the moment, with investors perhaps betting that as long as a so-called soft landing is on tap, stocks can handle it.
He said participants may be figuring that if the economy is slowing, interest rates will go down, and that will push up stock valuations. Alternately, If the economy is strong, rates will increase a bit more, but so will earnings.
Nonetheless, any good rally could be vulnerable to a correction, and Hyman said Friday's third-quarter gross domestic product growth report poses the biggest near-term threat.
Stocks gained Wednesday after the Federal Reserve opted to hold a key short-term interest rate steady, as expected, and hinted in its statement that it would stand pat for the time being.
Both stock and bond investors seemed to respond positively to the statement, seeing it as an indication that the economy is slowing, but not heading for recession and that inflation is moderating.
Exxon and other earnings
Earnings news continued to impress, for the most part. Exxon Mobil reported the second largest profit ever for a U.S. company Thursday, thanks to still surging oil prices. Exxon (up $0.58 to $71.59, Charts) shares were modestly higher.
A number of Internet stocks bounced, including Yahoo! (up $0.70 to $25.19, Charts), eBay (up $0.62 to $32.70, Charts) and Amazon.com (up $0.60 to $38.28, Charts), which continued to benefit from its strong earnings report earlier in the week.
But not all the corporate news was so positive.
Sprint Nextel (up $1.05 to $18.77, Charts) posted lower third-quarter profit and weaker-than-expected subscriber growth Thursday morning. However, shares rose 6 percent in active New York Stock Exchange trade, with investors focusing on the company's improved quarterly revenue and its pledge to turn around its wireless business.
Boeing (down $1.89 to $78.97, Charts), a Dow industrials component, lost another 3 percent, with investors continuing to express disappointment after the aerospace leader reported quarterly profit Wednesday that fell from a year earlier, and raised its 2007 earnings forecast to a range that was still shy of analysts' forecasts.
In addition, Red Hat (down $4.71 to $14.80, Charts), the Linux open source software distributor, slumped 28 percent and topped the Nasdaq's most-actives list. Red Hat was hit hard by late-Wednesday news out of Oracle that it will would offer half-price technical support to Red Hat Linux customers.
Shares of Renovis (down $10.76 to $3.44, Charts) slumped 74 percent in unusually active Nasdaq trading after the biotech said a late-stage trial of its experimental stroke medicine had failed. The news prompted licensing partner AstraZeneca to halt development of the drug.
Market breadth was positive. On the New York Stock Exchange, winners beat losers nearly two to one on volume of 1.70 billion shares. On the Nasdaq, advancers beat decliners by three to two on volume of 2.38 billion shares.
U.S. light crude oil for December delivery fell $1.04 to $60.36 a barrel on the New York Mercantile Exchange after climbing more than $2 Wednesday.
Falling bond yields helped stocks. Treasury prices rose for the second session, with the 10-year note yield sliding to 4.72 percent from 4.76 percent late Wednesday. Prices and yields move in opposite directions.
COMEX gold for December delivery rose $9 to settle at $599.80 an ounce.