NEW YORK – U.S. stocks rose Tuesday as investors bet that congressional elections would usher in a more business-friendly climate in Washington, helping prospects for corporate profits.
Boeing Co. led blue chips to a new trading high after the world's second-biggest aircraft maker won a $2.3 billion order from FedEx Corp. (FDX). Strong quarterly reports from both Toyota Motor Corp. (TM) and Emerson Electric Co. also lent strength to the market.
The broad advance came as investors bought optimistically ahead of an election that could strip power from Republicans in the House of Representatives for the first time since 1994. Stocks often rally on elections as Wall Street bets change will lead to an environment more favorable to business; the theory on the Street is that a split in power in Washington will create legislative gridlock, slowing down regulatory change.
"Gridlock is good, Wall Street doesn't like change," said Charles Gabriel, senior Washington analyst for Prudential Securities. "You're not going to have runaway spending increases, you won't have a repeal of the Bush tax cuts, and there's no legislative change that will roil industries. The green light is on for equity investments because you've got protection against any major changes."
The Dow rose 51.22, or 0.42 percent, to 12,156.77, building on Monday's 119-point gain. The index of 30 large-cap stocks rose to as high as 12,196.32 earlier in Tuesday's session, surpassing its previous trading high of 12,167.02.
Broader stock indexes also advanced. The Standard & Poor's 500 index rose 3.06, or 0.22 percent, to 1,382.84, and the Nasdaq composite index added 9.93, or 0.42 percent, to 2,375.88.