Stocks rise following housing, industrial data

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NEW YORK -- Wall Street shot higher Wednesday after investors shrugged off a mixed reading on the housing sector and focused on the positives: a jump in industrial output, a retreat in crude oil prices and new cash pouring into the stock market. The Dow Jones industrials rose 103 points to another closing record.

Stocks initially slipped after Commerce Department data showed applications for building permits fell by the biggest amount in 17 years during April punctured an early rally. But they gradually regained strength, finding support from a Federal Reserve report that showed industrial output rose more than expected in April, and a rebound in U.S. crude and gasoline inventories that caused crude oil prices to pull back.

News that billionaires Warren Buffett and Edward Lampert were upping their equity investments also gave investors confidence that stocks have further to climb, although the Dow has risen more than 1,300 points in the past two months.

Investors seem to be choosing to take weak housing data in stride; a lackluster read on home sales on Tuesday upended a big rally in stocks that sent the Dow Jones industrials briefly above 13,400 for the first time, but the market quickly regained its footing Wednesday.

"We seem to be in a period of time where it doesn't make a difference what the news is -- the market seems to find a reason to go up," said Ron Kiddoo, chief investment officer at Cozad Asset Management. "How long will this last? It's anybody's guess."

According to preliminary calculations, the Dow rose 103.69, or 0.77%, to 13,487.53, to its 23rd record close of the year. It also had a new trading high, 13,489.57.

Broader stock indicators also advanced. The Standard & Poor's 500 index gained 12.95, or 0.86%, to 1,514.14, and the Nasdaq composite index rose 22.13, or 0.88%, to 2,547.42.

Strength in sectors such as airlines, helped by falling oil prices, gave a lift to stocks. United Airlines parent UAL Corp. advanced $1.32, or 4%, to $34.62; Continental Airlines Inc. rose $1.48, or 4%, to $37.83; and American Airlines parent AMR Corp. gained $1.28, or 5%, to $26.66.

Bonds showed little change despite the economic readings. The yield on the benchmark 10-year Treasury note remained flat at 4.71% from late Tuesday. The dollar was mostly higher against other major currencies, while gold prices fell.

Light, sweet crude fell 62 cents to $62.55 per barrel on the New York Mercantile Exchange. Crude prices have risen in recent sessions amid concerns about supply disruptions, particularly in Nigeria, but Wednesday's U.S. inventory data showed domestic gasoline and crude inventories rose more than expected last week -- a development that investors hope will help pull U.S. pump prices back below $3 a gallon.

While Wall Street often has an appetite for economic data as it tries to determine where the economy is headed, it sometimes looks past good or bad economic news. In a potentially worrisome sign, requests for new construction permits fell 8.9% in April, the biggest drop since a 24% plunge in February 1990; but investors were pleased to see that construction of homes and apartments increased 2.5% in April from March to a seasonally adjusted annual rate of 1.528 million units.

"It seems like the market has taken a lot of the news positively this year whereas last year investors might have reacted negatively," said Paul Alan Davis, a portfolio manager at Charles Schwab Investment Management Inc.

Investors also embraced the Fed's report that industrial output rose by 0.7% in April. The gain was more than double the 0.3% gain that had been expected and in part reflected a rebound in manufacturing. In March, output fell 0.3%.

In corporate news, Citigroup Inc., one of the 30 stocks in the Dow industrials, rose $2.12, or 4%, to $54.91 after billionaire hedge fund manager Edward S. Lampert said he acquired more than 15 million shares of the financial services conglomerate.

And in another sign that liquidity is high and likely to keep buoying stocks, Warren Buffett's Berkshire Hathaway Inc. reported in a regulatory filing that it doubled its stake in Johnson & Johnson, also a Dow component. Johnson & Johnson rose $1.23, or 2%, to $63.05.

Injecting the market with an extra dose of confidence, corporate takeover activity keeps soaring. Bausch & Lomb Inc. rose $6, or 9.8%, to $67.50 after private equity concern Warburg Pincus struck a deal to acquire the eye-care product maker, which has faced product recalls and accounting troubles, for about $3.67 billion.

The Russell 2000 index of smaller companies rose 6.02, or 0.74%, to 820.20.

Advancing issues outnumbered advancers by about 5 to 4 on the New York Stock Exchange, where volume came to 1.51 billion shares, down from 1.64 billion on Tuesday.

Overseas, Japan's Nikkei stock average closed up 0.09%. Britain's FTSE 100 fell 0.14%, Germany's DAX index fell 0.32%, and France's CAC-40 fell 0.53%.

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