NEW YORK, (Reuters):
BLUE CHIPS advanced yesterday, rising to their highest close of the year, after an encouraging manufacturing report fanned investor hopes for an economic recovery.
But the tech-laden Nasdaq declined, weighed down by a sell-off in semiconductor stocks as investors locked in gains from a rally of more than 24 per cent in the index since mid-March.
Stocks got an early boost after the Institute for Supply Management's (ISM) closely watched survey showed that the battered US manufacturing sector slowed its rate of decline by more than economists had expected.
"There's growing confidence that the economy is improving. You look at the tax cuts, the fact that we're going to have low interest rates for a while, and the weaker dollar. The ISM number adds to that confidence," said Rich Nash, chief market strategist at Victory Capital Management in Cleveland.
The Dow Jones industrial average gained 47.55 points, or 0.54 per cent, at 8,897.81, after surpassing the psychologically important 9,000 level earlier in the session. The broader Standard & Poor's 500 Index was up 3.41 points, or 0.35 per cent, at 967.00, also its highest close so far this year.
"A lot of people were waiting to see if the Dow could push through 9,000," said Steve Kolano, equity trader at The Boston Company Asset Management. "But by late afternoon, people said 'we couldn't do it' and then we saw a quick sell-off when they began to take profits off their long positions during the day," Kolano said.
The technology-laced Nasdaq Composite Index eased 5.16 points, or 0.32 per cent, at 1,590.75, breaking a six-day string of gains.
Contributing to the Nasdaq's decline was the inability of chip stocks to break through a key technical level, traders said.
