S&P 500 Index Closes Above 1,000Karyn McCormack
Stocks jumped Monday following a report showing an improvement in manufacturing activity, pushing the S&P 500 index over 1,000 and the Nasdaq index above 2,000, key psychological thresholds. A few market experts, including New York University economist Nouriel Roubini and former Federal Reserve Chairman Alan Greenspan, said they think the recession is easing.
Two widely-watched market measures sailed past important levels for investors. The broad Standard & Poor's 500-stock index finished at 1,002.63, rising 15.15 points, or 1.53%. This was the index's first close above 1,000 since Nov. 4, 2008.
And the tech-heavy Nasdaq composite index closed at 2,008.61, with a gain of 30.11 points, or 1.52%. This index has not traded above 2,000 since Oct. 1, 2008.
The 30-stock Dow Jones industrial average climbed 114.95 points, or 1.25%, to 9,286.56.
Treasuries fell as stocks rose, sending the 10-year note down at 95-27/32 for a yield of 3.639%. The dollar index fell sharply, off 0.78 to 77.57. Gold and oil futures moved higher after Roubini forecasted higher commodity prices.
In breaking news, Bank of America (BAC) shares were up even after news that the SEC charged BAC with making materially false and misleading statements in its Merrill Lynch acquisition. The WSJ reported that the bank agreed to pay $33 million to settle SEC charges over bonuses in the Merrill deal. Also, Bank of America announced that Sallie Krawcheck will join the company and run Global Wealth and Investment Management. She will also be a member of the Executive Management Team.
In economic news Monday, U.S. July ISM Manufacturing index rose to 48.9 from 44.8 in June, and June Construction Spending rose 0.3% after falling 0.8% in May. Both reports were stronger than expected. These data, plus strong second quarter Chinese manufacturing, add to the argument that the economy has bottomed, says S&P MarketScope. But the Fed and many Obama officials warn the recovery will be slow, says S&P.
Reuters reported that former Fed Chairman Alan Greenspan said he is pretty sure that the economy has already hit bottom. He says promising indications include good news from weekly production figures for different industries. He said signs of stabilization and increased confidence in the economy could be dashed if home prices were to take another turn downward. Greenspan cited many caveats for his short-term optimism, among them the huge government deficit and a concern that home prices may not have stabilized enough.
Among stocks in the news Monday, Ford Motor (F) said total sales (including fleet) increased 2% for July -- the first year-over-year jump for the auto maker in almost two years, according to the company's sales analyst. Ford, Lincoln and Mercury retail sales increased 9%, while fleet sales were weak. The auto maker noted the benefit of Cash-for-Clunkers program.
"Early vehicle sales figures suggest that the markets will indeed enjoy the big vehicle sales pop that was expected following reports late last week of the success of the cash-for-clunkers program," wrote Mike Englund at Action Economics in a note Monday.
Google (GOOG) CEO Eric Schmidt resigned from Apple's (AAPL) board of directors. Apple CEO Steve Jobs said Schmidt would have had to recuse himself from large portions of the company's board meetings. The reason is Google is entering more of Apple's core businesses.
Humana (HUM) posted $1.67, vs. $1.24 a year ago, second quarter EPS on 7.5% revenue rise. It notes in July 2009 it was notified that it was not awarded the third generation TRICARE contract for the South Region. Humana has filed a related protest with the Government Accountability Office. The company sees $6.10-$6.20 2009 non-GAAP EPS, which excludes any potential accounting charges and other costs associated with the military contract loss.
Tyson Foods (TSN) posted $0.35, vs. $0.03, third quarter EPS despite 2.7% sales drop. The Street was looking for $0.21-$0.22.
Netflix (NFLX) inked a deal with Disney's (DIS) ABC Television Group that will make several of ABC's most popular TV series available to be streamed instantly from Netflix.
3M Co. (MMM) shares got a lift after Goldman Sachs reportedly upgraded the stock to buy from neutral.
National Retail Properties (NNN) reported $0.45, vs. $0.48, second quarter FFO as higher operating expenses offset 4.1% revenue rise. Posts $0.32 vs. $0.38 second quarter EPS It revised 2009 FFO guidance from $1.65-$1.75 to $1.65-$1.70, which includes non-cash interest expense of about $0.07 due to changes required in accounting for convertible debt.
The big loser of the day: Huron Consulting Group (HURN). The shares tumbled 69% to 13.61 after the company said it will restate financial statements for years 2006-2008 and for the first quarter of 2009, to correct accounting for certain accounting-related payments received by the sellers in connection with sale of certain acquired businesses. Estimated impact on net income and EBITDA for all restated periods of $57 million. It named James Roth as CEO. It expects second quarter revenue before reimbursable expenses of $164-$166 million, lower-than-expected 2009 revenue of $650-$680 million. Baird downgraded the stock and cut its price target to $15.