With electricity flowing well in the Northeast after a massive power outage late last week, stocks closed with solid gains on Monday. Trading volume remained light. There was no new economic news to set the tone for the session.
The blue-chip Dow Jones closed at its highest level since June, 2002, up 90.80 points, or 0.96%, at 9,412.40. The broader Standard & Poor's 500 index gained 9.07 points to 999.74. The tech-heavy Nasdaq composite index added 2.15%, on the back of tech issues, or 37.48 points to finish at 1,739.49. Semiconductor and Internet stocks were particularly strong, notes S&P MarketScope.
"We expect little direct impact of the Northeast blackout on the economy," says David Wyss, senior economist at S&P. "Closures were too short to significantly cut spending or production. Production losses can be made up, especially given the low production levels in August because of vacation schedules."
"It's good to be able to sit back, and point to clearly defined reasons that the market moved up," says Art Hogan, market strategist at Jefferies & Co. in Boston. "Semiconductors led the Nasdaq, and retailers led the Dow."
Home improvement retailer Lowe's(LOW ) finished 6.3% higher as its second-quarter earnings per share tops estimates. The company reported net earnings of $597 million for the quarter, a 28% increase compared to the same period a year ago. Diluted earnings per share increased 27% to 75 cents per share.
Advanced Micro Devices(AMD ) gained 14%, following a favorable mention in Barron's.
Not surprisingly, energy stocks were on the move Monday. First Energy (FE ) lost 9.3% as investigators looking into Thursday's blackout focus on the company's transmission lines and generating plant as sources of the blackout.
Millennium Pharmaceuticals(MLNM ) and Abbot Laboratories(ABT ) have announced they are no longer in alliance to discover, develop, or commercialize compounds in fields of Type 2 diabetes, and obesity. Millennium Pharmaceuticals added 3.6%, and Abbot Laboratories was slightly higher.
Also in pharmaceuticals, Health Canada has approved Gamunex, Bayer AG's (BAY ) new immune globulin intravenous product, for treatment of idiopathic thrombocytopenic purpura, and other conditions. Bayer ended the day 2.5% higher.
There was news on the M&A front Monday. SPS Technologies(ST ) surged 28%, to finish at $43.95, on news that the company agreed to be acquired by Precision Castparts(PCP ) for $43.78 per SPS share for a total of $575 million, including after-tax option payments. Precision Castparts gained 2.8%.
Integrated Defense Technologies(IDE ) has agreed to be acquired by DRS Technologies(DRS ) for $550 million, including debt assumption. Integrated Defense gained 14% on the news, while DRS shed 13%.
EXE Technologies (EXEE ) has agreed to be acquired by SSA Global Technologies. The terms include $7.10 cash per EXEE share. EXE Technologies swelled 16% on the news.
Jarden Corp. (JAH ) will acquire Lehigh Consumer Products for $155 million in cash. The deal is expected to be accretive to the company's earnings per share in 2003. Jarden ended the day up 1.8%.
A maker of electronic display systems, Planar Systems (PLNR ), expects fiscal 2004 earnings per share of $1.25 on sales worth $275 million. Planar finished higher by 6.05%.
Companies reporting second-quarter earnings this week include Home Depot (HD ) on Tuesday, and Limited Brands (LTD ) on Thursday.
In economic news this week, housing starts and the delayed University of Michigan sentiment survey are scheduled to be released on Tuesday. On Thursday, traders will hear jobless claims, leading indicators, and the Philadelphia Fed Index.
Treasuries finished unchanged to higher in a technically dominated, corrective trade following last week's dislocations, says economic research outfit MMS International. Intermediate and longer dated notes outperformed, as the 10-year note found support at 4.50% and traders covered short positions. Shorter-dated issues "continued to feel the pinch from expectations of a stronger third quarter economy, and the potential for a rate hike sooner rather than later," says MMS.
The dollar gained ground against the euro -- to about $1.11 per euro -- prodded by expectations for strong U.S. growth, and concerns about European economies.
European markets finished higher on Monday. In London, the Financial Times-Stock Exchange 100 index closed up 24.8 points, or 0.58%, at 4,272.10. BP-Amoco, Vodafone, and GlaxoSmithKline contributed to the advance, with the latter gaining after a wire-service report that Bayer and GlaxoSmithKline may gain U.S. approval to sell Levitra, a pill that could rival Pfizer's Viagra, and which the companies believe will generate $1.1 billion in annual revenue.
In Paris, the CAC 40 ended up 0.67% at 3,301.08. Germany's DAX index finished higher by 1.84%, or 63.30 points, at 3,507.23. The biggest contributors to the advance on the DAX included Allianz, Siemens, Munich RE, and Bayer.
Asian markets finished higher on Monday. Japan's Nikkei 225 index pushed ahead 1.72%, over the 10,000 mark to finish at 10,424.6, the highest close in about a year. Major bank stocks finished higher, such as Mizuho FG, which gained 6.36%; and Sumitomo Mitsui FG, which added 6.52%.
In Hong Kong, the Hang Seng index rose 100 points, or 0.96%, to close at 10,525.04