Despite Wavering, Stocks End Higher
Following seesaw trading for most of the session on Monday, stocks managed to hold in positive territory, despite uncertainty about the outlook for the economy and corporate earnings.
Speaking before the International Monetary Conference in Singapore on Monday, Federal Reserve Chairman Alan Greenspan said there's little in the way of "inflationary expectations" in the U.S., but expressed concerns more rises in energy prices could further sap corporate earnings.
But the specter of weaker corporate profits again reared its ugly head. Cypress Semiconductor Corp. (CY ) said its earnings and revenues would be lower than expected amid stagnant hopes for recovery in the computer chip sector.
"Friday wasn't a bad day, so today (Monday) there's a little profit taking," Alfred Kugel, investment strategist, Stein Roe Farnham, told Standard & Poor's research unit. "We've had a little bit of a sell-off in some of the tech stocks, particularly the chip makers," he said.
Among the stocks in the news Monday, Sunoco Inc. (SUN ), a Northeastern oil refiner and marketer, said second-quarter earnings would be higher than expected on strong sales profit margins.
And in the energy corner, OPEC oil ministers reassured jittery energy markets that the cartel would make up for any shortage of crude after Iraq halted most of its oil exports. On Monday, crude prices shot higher initially on the Iraqi announcement, but shed those gains as it became apparent OPEC members would not allow a shortfall to occur. OPEC representatives were in Vienna, where they were scheduled to meet Tuesday to set future targets for output.
The Dow Jones Industrial Average ended up 70.72 points, or 0.64%, to 11,061.13. Among the winners were biotech and oil stocks. The Nasdaq index gained 6.52 points, or 0.30%, to 2,155.96. The broader S&P 500 index added 6.37 points, or 0.51%, to 1,267.04.
U.S. Treasuries ended higher. Interest-rate sensitive shorter-dated Treasuries got the biggest boost after Greenspan's remarks raised hopes for at least one more Fed rate cut at its policy meeting later this month.
European markets ended higher. In London, the Financial Times-Stock Exchange 100 index gained 46.90 points, or 0.81%, to 5,856.50. In Germany, the DAX Index added 49.19 points, or 0.80%, to 6,174.36. Markets in France were closed for observance of Ascension Day.
In Asia, markets finished higher. The Nikkei added 50.51 points, or 0.38%, to 13,312.35. Banking stocks were hit especially hard. In Hong Kong, the market gained 66.11 points, or 0.50%, to 13,207.49.
By Heesun Wee in New York