Dow closes higher for the seventh straight day
NEW YORK – The Dow Jones industrial average closed higher for the seventh consecutive day Tuesday. That's the longest series of gains for the index since July.
McDonald's Corp. was the biggest gainer of the 30 stocks in the Dow, rising 2.6 percent after reporting January sales that were higher than analysts expected.
Investors took in stride a move by China's central bank to control inflation by raising short-term interest rates.
The Dow Jones industrial average rose 71.52 points, or 0.6 percent, to close at 12,233.15. The index has had only one down day in the last 10, on Jan. 28 when the protests in Egypt escalated.
The Standard & Poor's 500 index rose 5.52, or 0.4 percent, to 1,324.57. The Nasdaq composite index rose 13.06, or 0.5 percent, to 2,797.05.
China raised interest rates for the third time since October in an effort to keep prices from rising too fast. The country's economic boom has resulted in higher prices, forcing some poor families to spend up to half of their incomes on food.
Many large U.S. companies have counted on spending in China for growth. Previously, interest rate hikes in China have resulted in stock losses in the U.S. because of fears that spending there would fall.
Brain Gendreau, market strategist at Financial Network, said investors are becoming less concerned about slower spending in China because they are more confident that the U.S. economy will grow on its own.
"Raising interest rates is what the Chinese need to do when they have such an overheated economy," he said.
Bond prices fell, extending a week of losses and sending their yields higher. The yield on the benchmark 10-year Treasury note rose to 3.73 percent from 3.64 percent Monday, its highest rate since last April.
The government auctioned $32 billion of three-year notes at a yield of 1.34 percent, the highest borrowing rate the government has had to pay on those notes since last May. Interest from foreign buyers was relatively weak.
Better economic news, including a drop in the unemployment rate, has led investors to sell low-yielding government bonds over the past two weeks. Some of that money is going into stocks, especially those of large corporations that pay fat dividends.
Quincy Krosby, market strategist with Prudential Financial, said the Dow average has been benefiting from a flight of money out of bonds as conservative investors seek out large, relatively stable companies such as the 30 that make up the Dow industrials.
"If you were in bonds, chances are you'll buy the large companies with strong balance sheets," Krosby said.
Walt Disney Co. rose 3.7 percent in after-hours trading. The company reported earnings after the market closed that beat expectations thanks to higher advertising revenue at its ESPN and ABC television networks.
Avon Products Inc. fell 3 percent to close Tuesday at $28.47 after its fourth-quarter earnings fell and missed expectations.
Three stocks rose for every two that fell on the New York Stock Exchange. Consolidated volume was relatively light at 3.9 billion shares.