Late arrivals to rally push shares higher

Dow Jones: 12,391.25 (+73.11) S&P 500:1,343.01 (+2.58) Nasdaq:2,833.95 (+2.37)

LATE ARRIVALS to the speediest rally in stocks since the Great Depression pushed stocks higher for a third week yesterday despite growing signals of an overheating market.

More than $8 billion flowed into US equity funds for the week ended February 16th, according to Thomson Reuters Lipper data.

Analysts said investors appear reluctant to sell despite slack volume and a narrowing spread between winners and losers.

“We’ve had one of the most impressive rallies in recent memory, but the fact is any dip is met with substantial buying power,” said Ryan Detrick, chief strategist at Schaeffer’s Investment Research in Cincinnati.

About 7.2 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, far below last year’s estimated daily average of 8.47 billion. However some point to a lack of sellers as the reason relatively few shares are changing hands.

“Volume hasn’t been normal for a bull market,” Detrick said. “The retail crowd has missed a good chunk of this rally.”

For most of 2010 retail investors put net cash into mutual funds that invest in fixed-income securities.

However, with more signs the US economic recovery is strengthening and US equity indexes rising, investors have found renewed appetite for stocks.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of more than four to three yesterday.

Caterpillar helped lift the Dow industrials, rising 2.4 per cent to $105.86 after the equipment-maker said machinery sales through dealers accelerated in the three months through January.

Individual names were on the move in response to the latest batch of earnings reports.

Brocade Communications Systems topped estimates and forecast second-quarter profit above Wall Street’s expectations, pushing its shares up 6 per cent to $6.38.

Intuit, the maker of TurboTax and QuickBooks accounting software, reported late Thursday a profit that beat Wall Street expectations and raised its quarterly earnings forecast, sending its shares up 7.3 per cent to $54.11.

US markets will be closed on Monday for the Presidents Day holiday. – (Reuters)