Really it's just resiliency, says Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "The bottom line is that there are signs of life, and the market doesn't want to go down. Buying late in the day and closing near the high of the day is more proof that the bulls are in control."
Stocks edged higher after zigzagging in subdued trading Monday on mixed reports about the economy and corporate earnings.
The Dow Jones industrial average rose only 15 points. But modest moves in the market's major indicators belie larger forces at work: Investors aren't dumping stocks, even in the face of downbeat news.
On the plus side, a government report showed new home sales posted the fastest increase in June in more than eight years as buyers jumped on reduced prices, low interest rates and a federal tax credit for first-time homeowners. That sent stocks of home builders surging.
Analysts said the small moves were a good sign for the market. Brian F. Reynolds, chief market strategist at WJB Capital Group, said investors were surprised by the strength of corporate earnings reports in the past two weeks and are adjusting their outlooks.
But some analysts remain cautious because expectations were low for results from the April-June quarter.
"The market has dropped the bar of expectations to the ground, and companies are stepping over it quite easily," says Alan Gayle, director of asset allocation at RidgeWorth Capital Management. "Unfortunately, one of the things that leads us to concern is that a lot of that earnings growth is coming through savings. What a lot of investors are looking for is signs that the top-line growth is turning around."
The Dow Jones Industrial Average rose 15.27 points, or 0.2%, to 9108.51, and the S&P 500 added 2.92 points, or 0.3%, to 982.18. The Nasdaq Composite edged up 1.93 points, or 0.1%, to 1967.89.
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