Stocks finished higher Monday, though off session peaks, as a report on the housing market showed slightly less weakness than expected and a Federal Reserve official touted the strength of the economy. A rebound in oil futures helped energy shares bounce back from early losses. End-of-quarter portfolio adjustments were also boosting stocks, says Standard & Poor's Equity Research.
The Dow Jones industrial average rose 67.71 points, or 0.59%, to 11,575.81, paced by Caterpillar (CAT). The broader Standard & Poor's 500 index added 11.6 points, or 0.88%, to 1,326.38. The tech-heavy Nasdaq composite climbed 30.14 points, or 1.36%, to 2,249.07.
NYSE breadth was decidedly positive, with 23 issues advancing for every 11 declining. Nasdaq breadth was 18-12 positive.
From a technical perspective, stocks could make another run at bull-market highs, says Mary Ann Bartels, chief U.S. market analyst at Merrill Lynch. "If new recovery highs are achieved we do not believe this is a new leg of a bull market move and prefer to remain defensive into October," Bartels says.
Others see stocks headed for a change in direction. "Multiple markets look poised to reverse course over the next week: reversals in equities and treasuries to the downside, and rebounds in commodities," says Morgan Stanley technical analyst Mark Newton.
A report on the housing market Monday showed less weakness than analysts expected. Existing home sales declined to 6.3 million in August, from 6.33 million in July. Homebuilder shares gained on the news.
Elsewhere, Dallas Fed President Richard Fisher sounded an upbeat note on the economy. "I continue to fret more about inflation than I do about growth," Fisher said, adding that most of the economy is doing "extremely well."
Consumer confidence numbers highlight the economic calendar Tuesday. Consumer confidence is expected to rise to 103.0 in September, from 99.6 in August, says Action Economics.
Oil prices rebounded after briefly sinking below $60. In the energy markets, November West Texas Intermediate crude oil futures rose 90 cents to $61.45 a barrel after OPEC said its members had discussed oil's recent slump, less than two weeks since the group agreed to keep output unchanged.
Among stocks to watch, Hewlett-Packard (HPQ) said Friday that Chairwoman Patricia Dunn resigned, taking responsibility for a probe into media leaks. CEO Mark Hurd succeeds Dunn as chairman.
Tobacco shares dropped as a federal court judge certified a potential $200 billion class-action case against Altria's (MO) Philip Morris USA and other light cigarette makers.
Media conglomerate Viacom (VIA
, VIA.B) announced Chairman Sumner Redstone's salary would be cut and his long-term pay would be aligned more closely to the performance of Viacom's stock.
On the downside, Chiquita Brands (CQB) was sharply lower after the banana producer suspended its dividend and issued a third-quarter profit warning over worries about spinach safety and lower banana prices.
Drugstore chain Walgreen (WAG) was lower after the company reported a 25% increase in fourth-quarter profit on a 16% sales rise.
Shares of General Motors (GM) edged down amid news CEO Richard Wagoner and Nissan-Renault head Carlos Ghosn are set to meet this week in Paris as they consider a possible alliance between the three automakers.
In analyst calls, UBS lowered its recommendation on U.S. Steel (X) from neutral to reduce. UBS also cut its recommendation on fellow steelmaker Nucor (NUE) from buy to neutral.
European markets finished mixed. In London, the Financial Times-Stock Exchange 100 index fell 24 points, or 0.41%, to 5,798.3. Germany's DAX index rose 18.34 points, or 0.31%, to 5,901.66. In Paris, the CAC 40 index added 4.54 points, or 0.09%, to 5,146.49.
Asian markets ended mixed. Japan's Nikkei 225 index edged down 0.86 points, or 0.01%, to 15,633.81. In Hong Kong, the Hang Seng index lost 54.61 points, or 0.31%, to 17,546.04. Korea's Kospi index gained 6.83 points, or 0.51%, to 1,355.21.
Treasury yields dipped despite the slightly firmer than expected housing data. The 10-year note rose in price to 102-17/32 for a yield of 4.55%, while the 30-year bond climbed to 96-28/32 for a yield of 4.69%.