Stocks Post Big Gains
Stocks posted major gains with the Nasdaq rising more than 3% on Monday as Wall Street embraced the view that the economy is nearing an upturn after another batch of upbeat data last week.
The Dow Jones industrial average raced up 217.20 points, or 2.09%, to 10,586.06. The tech-heavy Nasdaq was up 56.19 points, or 3.12%, to 1,858.93. The broader Standard & Poor's 500 index rose 22 points, or 1.94%, to 1,153.78.
Monday's advance marked the second straight session of a big rally that began on Friday after a closely watched gauge of manufacturing activity registered its highest reading in more than a year and a half.
Investors on Tuesday will get nothing in the way of economic data but will have more quarterly earnings reports to sift through. On the docket are results from drugmaker A.P. Pharma (APPA ) and retailers Costo (COST ) and Kohl's (KSS ).
Banks and old economy companies helped lead the market higher on Monday. Among them was General Motors Corp. (GM ). Carmakers said sales fell by a less than expected 3.5% in February.
Technology stocks largely brushed aside an earnings warning from an industry bellwether. Oracle Corp. (ORCL ), the database software company, put investors on notice after the close of trading Friday that its fiscal third quarter profits would fall short of expectations by a penny per share, mainly because of slow sales in Asia.
Investors will undoubtedly keep a watchful eye on economic releases due out later this week for further signs that the economy is emerging from a downturn. Of most interest will be the February employment report, due out on Friday, as the labor market has been particularly affected by the slump. Economists are expecting the nation's unemployment rate to tick up to 5.8% from 5.6% in January.
In corporate news on Monday, software company Manugistics Group (MANU ) said its fiscal 2002 fourth-quarter profits would top guidance as improved business spending raised revenues more than expected.
In merger news, defense contractor Northrop Grumman (NOC ) launched a hostile bid for TRW Inc. (TRW ) after the company shunned a previous takeover proposal.
On the downside, UBS cut its investment ratings on mome improvement retailers Home Depot Inc. (HD ) and Lowe's Cos. (LOW ), saying their shares already reflect expected profit growth.
Treasury prices extended Friday's declines, continuing to track the moves in stocks. With the data calendar empty Monday, the market remained fixated on stocks, according to Standard & Poor's economic research unit MMS.
Federal Reserve Vice Chairman Roger Ferguson, in his address on disaster recovery and business continuity to the Institute of International Bankers, said the Fed is looking into the after-effects and ramifications of the terrorist attacks on bank capital standards and regulatory provisions on liquidity. Questioned on the Enron debacle, he said it does not seem to be a systemic problem, according to press reports. There were no comments or hints on policy.
European markets closed with gains. In London, the FTSE 100 index was up 73 points, or 1.41% at 5,242 in reaction to Tokyo's 5.9% surge overnight and New York's burst on Friday on hopes for an economic recovery. The FTSE was aided by report that CIPS construction index rose to 55.4 in February from 54.0 in January and the CBI report that services optimism rose for first time in year.
In Germany, the DAX index climbed 148.43 points, or 2.91% to 5,245.84 on hopes that the US economic recovery will spill over to Europe and on the stock markets in Asia soaring overnight.
In France, the CAC 40 added 121.02 points, or 2.70% to 4,607.44.
Asian markets ended higher. In Japan, the Nikkei soared 5.90% to 11,450.22. The market was boosted by signs of an upturn in the U.S. economy, and progress in the reorganization of Japan's corporate sector. Plus, technical buy-backs related to new restrictions on short-selling continued from last week in full force.
In Hong Kong, the Hang Seng jumped 2.67% to 10,704.12.