Stocks posted modest gains on Monday, with late-day buying boosting the major indexes. Investors now await Tuesday's Federal Reserve's Open Market Committee decision on interest rates.
The Dow Jones industrial average added 102.6 points, or 1.03%, to 9,965.2, reaching a new recovery high on broad strength in blue chip stocks. The broader Standard & Poor's 500 index finished up 7.8 points, or 0.73%, to 1,069.3. The Nasdaq Composite index recovered from it's lower trading most of the day, and finished up 11.03 points, or 0.57%, to 1,948.85. Some steel stocks rose on the perception that President Bush's lifting of steel tariffs last Thursday will have less impact than originally thought. Construction material and forest products also lifted.
Airline stocks rebounded from their recent weakness, following a JetBlue Airways (JBLU) upgrade to 'buy' from 'neutral' by Merrill Lynch. The analyst there said that JetBlue's business model remains intact despite the company lowering its fourth quarter operating margin guidance last week, and that the 45% decline in JetBlue's share price over past two months, and a concurrent drop in valuation more than fully accounts for these concerns. JetBlue gained 7.6%.
Health care facility stocks were suffering after UBS Financial downgraded Health Management (HMA) to 'reduce' from 'neutral.' HMA has lost 11%.
Avon Products (AVP) slipped 8% after saying its fourth quarter U.S. sales would be up low-to-mid-single digits, somewhat lower than expected. The company sees fourth quarter EPS as high as $1.04, including a 5 cents tax settlement. S&P reiterated its 'accumulate' rating of the stock, and Banc of America kept its 'neutral' rating.
Motorola (MOT) ended lower following a Financial Times article that reports the company will look for acquisitions or partnerships to boost its communications business after deciding to spin off its semiconductor product division. S&P maintains its 'hold' rating on the stock.
Nokia (NOK) has lost its share of the global handset market in the third quarter, according to research from Gartner (IT). The report says the company is suffering from the onslaught from rivals like Siemens AG, and Samsung Electronics. Nokia shares were somewhat lower.
Meanwhile, Gartner will eliminate about 200 jobs, or 5% of its global workforce. The tech research outfit expects to record a charge of about $28 million to $32 million, some of which will be recognized in the fourth quarter, with the balance to be recognized in the first quarter of 2004. The stock finished 2.2% lower.
In pharmaceuticals, reviewers for the Food and Drug Administration reportedly expressed concern that an angina drug being developed by CV Therapeutics (CVTX) causes an electrical impulse problem that could result in abnormal heart rhythms. CIBC World downgraded the stock to 'underperform,' First Albany also downgraded the stock. CV Therapeutics shed 27%.
Genentech (DNA) and Biogen IDEC (BIIB) have said that their Phase III randomized study evaluating the use of Rituxan with chemotherapy as a front-line treatment for aggressive lymphoma has met its pre-specified primary efficacy endpoint early. Genentech finished slightly higher, but Biogen IDEC dipped 2.3%.
A provider of patient management systems for doctors, Cerner (CERN), lost 11% after the company wasn't selected by England's National Health Service (NHS) National Programme for IT in two of five regions (North East or London) in England. Cerner continues to be a finalist in all three of the remaining regions.
Companies expected to issue earnings updates later this week include retailers Costco Wholesale (COST), Autozone (AZO), and Kroger (KR) on Tuesday. Wednesday brings an update from homemaker Toll Brothers (TOL). Releases from tech names Adobe (ADBE), Ciena (CIEN), and Verity (VRTY) arrive on Thursday.
Looking ahead to Tuesday, the Federal Reserve's open market committee meeting dominates, though analysts say that the Fed is unlikely to make any changes. "We had thought they would at least change the language on the labor market to "is beginning to improve" from "has stabilized," but [Friday's] payroll data argue against that," write S&P analysts David Wyss and Rick MacDonald in their weekly market analysis.
"Concern about what Fed has to say tomorrow is probably overblown," adds Art Hogan, market strategist at Jefferies & Co. "We probably will have to wait until Thursday before we get any real data again."
Indeed, the bulk of important economic data is due later in the week. Jobless claims, November retail sales and inventories data are due Thursday. An update on producer price index and a preliminary read on the University of Michigan Consumer Sentiment index is due Friday.
Treasury prices finished lower in low-olume trading, with market players awaiting the FOMC meeting on Tuesday. No change in interest rates is expected. The dollar has hit new recent lows against the Euro (1.22) and the British pound (1.73).
European bourses finished lower Monday, though off of their earlier lows. London's Financial Times-Stock Exchange 100 index lost 9.3 points, or 0.21%, to finish at 4,357.7. Some traders had been encouraged the U.K. October Manufacturing index, which rose at its fastest rate in 15 months, but discouraged that producer prices rose in November.
In Paris, the CAC 40 lost 22.23 points, or 0.64%, to 3,434.91. The French 10-month budget deficit widened by 14% as revenue declined. Thompson, Aeronautic Defense & Space stocks were lower. Germany's investor confidence is reported to be higher, and a separate report shows the German economy to be improving a bit, but the DAX index was still down 35.19 points, or 0.92%, to 3,806.54.
Asian stock markets ended sharply lower Monday. Japan's Nikkei 225 index slid 328.12 points, or 3.16%, to 10,045.34. In Hong Kong, the Hang Seng index moved 127.29 points lower, or 1.11%, to finish at 12,177.44.
"Expect global equities to continue to swing with the outlook for global growth, which is heavily dependent on demand from the world's largest consumer - the U.S.," says S&P in its weekly market analysis.