Stocks rise for fourth straight day
Stocks edged higher Tuesday as investors bought companies that fare best when the economic outlook is bright. Gains in stocks were led by riskier parts of the market.
The stock market edged higher Tuesday as investors bought companies that fare best when the economic outlook is bright.Skip to next paragraph
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All major stocks indexes rose, but gains were led by the riskier parts of the market. The Russell 2000, an index of small-company stocks, climbed for a fourth straight day. The Dow Jones transportation average, seen as a leading indicator for the broader economy, also jumped.
The gains suggest that investors are getting more confident about the economy's prospects. In the first half of the year, stock markets were powered by the safer companies that paid large dividends.
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"When you see that leadership from the smaller caps that's probably a good sign overall for the bigger blue chips to potentially follow suite," said Ryan Detrick, a senior technical strategist at Schaeffer's Investment Research. "People are leaving the more defensive areas."
The Russell 2000 rose eight points, or 0.9 percent, to 1,018.05. It has gained 4.2 percent in July and is moving deeper into record territory. The index has risen more this year than its large-company counterparts, the Dow Jones industrial average and the Standard & Poor's 500 index.
The Dow Jones transportation index rose the most among major U.S. indexes Tuesday, led by strong gains for Alaska Air Group and FedEx.
The index jumped 148 points, or 2.4 percent, to 6,446. Alaska Air Group rose 7 percent after it forecast an additional $50 million a year in revenue from increased fees. FedEx rose 6 percent on speculation that William Ackman's hedge fund, Pershing Square, could invest in the company.
Wall Street is also turning its attention to corporate earnings. The second-quarter results should give traders and investors fresh insights into the economy. Market watchers spent most of June trying to figure out where the Federal Reserve was headed with its economic stimulus program.
Along with the quarterly results, investors want to see how confident companies are about the rest of the year, said Cam Albright, director of asset allocation for Wilmington Trust Investment Advisors.
Major U.S. stock indexes have notched a series of all-time highs this year on expectations that earnings will remain at record levels.