Stocks End with Modest Gains
Stocks ended their losing streak to close modestly higher on Monday as investors scooped up stocks that had been beaten down over anxiety about the dimming prospects for a swift economic recovery.
The Dow Jones industrial average finished up 28.03 points, or 0.30%, to 9,281.82. The Nasdaq composite index was higher by 19.37 points, or 1.34%, to 1,460.33. The Standard & Poor's 500 index gained 3.58 points, or 0.36%, to 992.72.
Tuesday will mark the first day of the Federal Reserve's rate-setting committee two-day policy meeting, with the policy announcement expected around 2:15 p.m. EDT Wednesday. The Federal Open Market Committee is widely expected to leave rates unchanged and retain its neutral policy stance.
But there will be considerable interest in the wording of the Fed's policy statement. While another terse statement is the most likely outcome, any changes to the more or less canned announcement could offer valuable hints on Fed thinking, notes S&P MMS.
The market may also take some cues from economic reports due Tuesday on existing home sales for May and consumer confidence figures for June. Home sales are expected to reach an annualized rate of 5.90 million from 5.79 million. But consumer confidence is expected to fall -- to 104 from 109.8 in May.
Several high-profile companies are expected to report their earnings results on Tuesday including semiconductor company Micron Technology (MU ), handheld device maker Palm (PALM ) and express delivery concern FedEx (FDX ).
On Monday, shares of big tech companies, including software companies Oracle (ORCL ) and Microsoft (MSFT ) helped the market rebound from an early sell-off.
Meanwhile, President Bush unveiled his long-awaited blueprint for the creation of a Palestinian state. But one political analyst said the vague proposal, which essentially called for Yasser Arafat's ouster as leader of the Palestinians, might not get a warm reception.
There was plenty of corporate news to unnerve Wall Street. Energy trader and pipeline operator Williams Cos. (WMB ) says it will lay off about 16% of its trading-floor staff or as many as 130 employees.
Meanwhile, Dynegy (DYN ) said it would take at least a $450 million charge in the second quarter as it restructures certain units and that it would also cut its dividend by 50% in the third quarter of this year.
Goldman Sachs cut its earnings per share estimates on No. 1 computer maker IBM (IBM ) to $4 from $4.05 for 2002.
Goldman also cut its per share estimates on software maker Siebel Systems (SEBL ) to $0.35 from $0.40 for 2002. Still, these stocks were trading higher.
Shares of entertaining and housewares maven Martha Stewart's firm Martha Stewart Living Omnimedia (MSO ) were under pressure once again after a sales associate with Merrill Lynch provided information that contradicts what Stewart has said about her sale of ImClone (IMCL ), the Wall Street Journal reported.
And shares of cigarette makers were lower after a Friday court ruling ordering R.J. Reynolds Tobacco Holdings (RJR ) to pay a $15 million punitive damage award to a Kansas smoker. Philipp Morris Cos. (MO ) also lagged.
WorldCom (WCOM ) fell below a dollar after Salomon Smith Barney cut its rating on the telecommunications company to underperform from neutral.
Meanwhile, the dollar fell to $0.98 per euro for the first time in more than two years as the less-than-snappy U.S. rebound tames the appetite for U.S. financial assets.
Weakness in the long bond carried over to other maturities, sending Treasuries across the yield curve lower in price on Monday. As equities managed to turn positive in the afternoon, Treasuries fell further behind.
European markets closed lower.
In London, the Financial Times-Stock Exchange 100 index was off 63.40 points, or 1.38%, to 4,541.90 as rising currency is making UK stocks expensive. The pound sterling is up to $1.5045 amid fears that the U.S. economy is stalling.
In France, the CAC 40 was down 130.29 points, or 3.43%, to 3,669.24.
Germany's DAX index was off 105.19 points, or 2.49%, to 4,127.22 as the euro surged to two-year high of $0.9801 amid perception that the U.S. economy is stalling and the greenback is overvalued.
Asia markets finished higher. In Japan, the Nikkei 225 index finished up 116.27 points, or 1.13%, to close at 10,471.32 as Tokyo stocks recovered from early losses in the Monday afternoon session led by exporter shares, piggybacking the yen's weakening to the 122.80 level against the U.S. dollar on the back of Japan's intervention to sell its currency.
In Hong Kong, the benchmark Hang Seng index ended up 65.48 points, or 0.62%, to close at 10,657.34.