Solid corporate earnings reports pushed stock prices higher Tuesday despite a sharp drop in consumer confidence.
The Dow Jones Industrial Average gained 72.49 points to 13,954.42, its highest close since November 2007. The S&P 500 Stocks Index also hit a new five-year high at 1,507.84, up 7.66 points, but the Nasdaq Composite Index fell a fraction to 3,153.66.
The Conference Board reported its consumer confidence index fell this month to the lowest level since November 2011 as households expressed concern about the economy and their personal finances because of the impact of legislation to avoid the fiscal cliff pushing up the withholding taxes on income.
However, home prices continued to climb according to the latest Case-Shiller home price index. Prices in the largest metropolitan regions rose 5.5 percent in November compared to the same month a year ago. In San Diego the year-over-year increase was 8.0 percent.
Oil prices climbed to a four-month high on Tuesday, up $1.13 to $97.57 a barrel as tensions in the Middle East increase. Gold snapped a five session losing streak, up $7.90 to $1,660.80 an ounce.
Pfizer Inc. (NYSE: PFE) rose 3.2 as the drugmaker also forecast higher-than- expected full-year profit. J.C. Penney Co. (NYSE: JCP) jumped 9.3 percent amid new store promotions. Energy shares climbed as Valero Energy Corp. (NYSE: VLO) reported a 20-fold gain in profit and Paul Singer’s Elliott Management Corp. urged Hess Corp. (NYSE: HES) to consider a spinoff of its U.S. shale assets. EMC Corp. (NYSE: EMC) and Seagate Technology Plc (Nasdaq: STX) led technology shares lower amid disappointing outlooks. Amazon.com Inc. (Nasdaq: AMZN) rose 9.4 percent in late trading after posting its results.
The S&P 500 has risen 5.7 percent this month, off to the best start of a year since 1989, as lawmakers agreed on a budget compromise and companies reported better-than-estimated earnings. The index has more than doubled from a 12-year low in 2009 as the Federal Reserve has increased its bond purchases to keep interest rates low to spur growth. The S&P 500 is less than 4 percent below its record of 1,565.15 set in October 2007, while the Dow is less than 2 percent from its all-time high.
Twenty-five companies in the S&P 500 were scheduled to report quarterly earnings Tuesday. About 75 percent of the 179 companies in the S&P 500 that have released results so far in the quarter exceeded profit projections.
About 67 percent have surpassed sales estimates, according to data compiled by Bloomberg. That’s the highest percentage since the second quarter of 2011, according to data compiled by Bloomberg. Fewer than half the companies had surprise sales gains in the second and third quarters.
Investors will watch an announcement from the Fed Wednesday to gauge the central bank’s future policy. Chairman Ben S. Bernanke’s latest round of bond buying will reach $1.14 trillion before he ends the program in the first quarter of 2014, according to median estimates in a Bloomberg survey of economists.
The Federal Open Market Committee will renew its commitment to asset buying during a two-day meeting starting Tuesday after determining the benefits from the program exceed any risk of inflation or financial instability, according to economists surveyed Jan. 24-25.
“Economic growth is so modest at the moment that it’s still highly unlikely they’ll consider tightening,” Michelle Clayman, chief investment officer at New Amsterdam Partners in New York, which manages $2.5 billion, said in a phone interview. “It’d be pretty surprising to see any changes there.”
Eli Lilly & Co. (NYSE: LLY) gained 3.2 percent to $54.32. Fourth- quarter earnings beat analyst estimates as sales of its top- selling drug, the Cymbalta depression treatment, increased 20 percent, helped by higher prices in the U.S.
Boston Scientific Corp. (NYSE: BSX) added 3.5 percent to $7.10. The maker of heart devices said it plans to cut as many as 1,000 jobs in an expansion of its restructuring program that will save an additional $100 million to $115 million annually. The company issued a sales forecast of $7.05 billion to $7.35 billion for 2013, compared with the $7.25 billion generated last year.
D.R. Horton Inc. (NYSE: DHI) surged 12 percent to $23.82. The company said fiscal first-quarter profit more than doubled as demand for new houses climbed in a recovering real estate market.
VMware Inc. (NYSE: VMW) tumbled 22 percent to $77.14 after saying first-quarter revenue will be $1.19 billion at most. Analysts on average had projected $1.25 billion, according to data compiled by Bloomberg.
Yahoo! Inc. (Nasdaq: YHOO) fell 3 percent to $19.70. The company gave first-quarter and full-year sales forecasts that fell short of some analysts’ projections.