Wall St hits recovery high

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Reuters

SPECULATOR BLAME: Government meddling in financial markets risks price distortion, exchange say.

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US stocks gained on Wednesday, pushing the Dow to a 17-month high, after a benign February inflation reading supported the Federal Reserve's renewed pledge of low interest rates.

The market reacted positively to a drop in the February Producer Price Index, further supporting the near-zero interest rates that have propelled the rally in equities.

On Tuesday, the S&P 500 rose above the 1,150 level that analysts had targeted as a critical resistance point, which once surpassed, could push the market higher.

However, volume remained light before a key options expiration on Thursday and Friday, when four different types of options and futures contracts expire in a convergence known as "quadruple witching."

"A lot of guys, if they haven't done anything by now are just going to sit tight," said Alan Valdes, director of trading operations for Kabrik Trading in New York.

"The market does not look like it wants to come in, though."

The seven-session winning streak for the blue-chip Dow is the longest since an eight-day run in August 2009, when it rose 4.9 per cent. In the last seven sessions, the Dow has gained 1.7 per cent, but volume has been lacklustre.

Investors expect the S&P 500 to rise 10 per cent during 2010, according to a quarterly Reuters poll published on Wednesday.

The Dow Jones industrial average gained 47.69 points, or 0.45 per cent, to end at 10,733.67. The Standard & Poor's 500 Index rose 6.75 points, or 0.58 per cent, to 1166.21.

The Nasdaq Composite Index advanced 11.08 points, or 0.47 per cent, to 2389.09.

On Tuesday, the Fed left benchmark rates unchanged near zero and renewed its pledge to hold them "exceptionally low" for an "extended period."

During Wednesday's regular session, the stock of coal miner Massey Energy Co advanced 5.8 per cent to US$53.15 ($74.40) a day after it announced the acquisition of privately held Cumberland Resources Corp.

 Massey Energy led gains in the S&P energy index, which rose 1.1 per cent.

Hartford Financial Services Group Inc gained 4.8 per cent to US$28.58, a day after the company announced a plan to repay the US Treasury. Discover Financial Services also said it would repay government bailout funds.

But Discover's shares slipped 0.4 per cent to US$15.24.

The S&P financial sector index gained 1.1 per cent.

About 8.64 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's estimated daily average of 9.65 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 7 to 3. On the Nasdaq, more than three stocks rose for every two that fell.

- Reuters