Wall St. Closes Up in Light Trading
Stocks rose Monday in one of the lightest trading days of the year as investors eyed the bright spots in a mixed bag of comments by Wall Street analysts, but remained cautious after five straight weeks of gains.
Trading volume was thin--with many investment firms lightly staffed in the waning days of Wall Street’s traditional summer doldrums--and that made for a volatile session.
“It’s as thin as a razor, and any old widow in Pasadena trying to sell 100 shares is going to move the market,” said Jon Brorson, director of equities for Northern Trust.
Wall Street, shaky after taking a tumble Friday, drew comfort early in the session from fresh data showing the housing sector blazing ahead. But the market zigzagged in the afternoon before surging just before the close.
The Dow Jones industrial average rose 46.05 points, or 0.5%, to 8,919.01, after falling 117 points earlier in the session. The Dow slid 180 points Friday on fears of slowing economic growth and renewed worries about corporate corruption.
The broader Standard & Poor’s 500 index rose 7.09 points, or 0.8%, to 947.95, and the tech-laden Nasdaq composite index gained 11.12 points, or 0.8%, to 1,391.74.
Although trading volume was light, breadth was strongly positive, with winners beating losers by more than 2 to 1 on the New York Stock Exchange and by close to that ratio on Nasdaq.
Stocks have raced higher in recent weeks, lifting the broad market nearly 19% from the multiyear trough hit in late July. But investors remain skittish with clear signs of a strong economic upturn yet to emerge.
“We’ve had a good rally in the market without a lot of economic data that would show that the economy’s accelerating, so it’s going to be hard to keep the market going,” said John Forelli at Independence Investment.
On Monday, investors took heart from a report that sales of new homes shot up in July--easily surpassing analysts estimates--as low mortgage rates added fuel to a sizzling housing market.
Weakness in semiconductor stocks kept the market under pressure, however, after two brokerage houses cut their ratings on companies in the chip sector. Bear Stearns cut its rating of chip maker Fairchild Semiconductor International, citing likely delays in earnings growth. Fairchild fell $1.20 to $13.45.
Salomon Smith Barney cut its ratings of Agere Systems and Applied Micro Circuits, citing ongoing risks and the lack of catalysts for either company beyond their attractive valuation. Agere, which makes semiconductors and optical components, fell 7 cents to $1.67. Applied Micro sagged 22 cents to $4.45.
In other trading, oil climbed 65 cents a barrel to $29.28 in New York trading on tensions between the U.S. and Iraq. Gold gained $2.70 to $309.40 an ounce. The dollar was little changed against the euro and Japanese yen. Yields on Treasury securities were flat.
In other highlights Monday:
* Calpine rose 75 cents, or 15%, to $5.75 after the power producer raised $138 million from Canadian investors and banks agreed to lend it $105 million to complete construction of a power plant in Colorado.
* AOL Time Warner, plagued in recent days by concerns about a federal inquiry into its finances, was the NYSE’s most actively traded stock, falling 46 cents to $12.30.
* Ciena buoyed Nasdaq after the communications equipment maker was upgraded by Soundview Technology, putting a shine on other sector heavyweights such as JDS Uniphase and Corning. Ciena gained 23 cents to $4.39, JDS Uniphase rose 26 cents to $3.30 and Corning rose 26 cents to $2.22.
* Weighing on the Dow was Boeing, which eased 24 cents to $36.89. One analyst said the decline follows Boeing’s proposal in labor talks Friday of an all-in-one contract that would include pay increases and higher pension contributions. The union rejected the proposal.
