Stocks Rise for a Third Session
Stocks climbed for the third straight session Monday as optimism that stoked last week’s rally overcame fears of more terror attacks sparked by the deadly bombing in Bali.
The market slumped at the open, shaken by reports of the blasts that killed more than 180 people Saturday on the Indonesian island. The attack fueled fears that Al Qaeda, blamed for last year’s terrorist attacks, is regrouping and planning more assaults.
But stocks erased the early losses, giving the broader market its first three-day rally in a month. Investors, although bracing for a flood of corporate earnings reports due out this week, extended the big rally of Thursday and Friday that sent the Dow industrials up 564 points and snapped a six-week losing streak.
“We’ve shrugged off the terrorism attacks from the weekend and we’re keying off a positive mood seen at the end of last week,” said Michael Palazzi, head of Nasdaq trading for SG Cowen.
The Dow Jones industrial average, down more than 100 points in early trading, finished up 27.11 points, or 0.4%, at 7,877.40. The Nasdaq composite index was up 10.06 points, or 0.8%, at 1,220.53. The broad Standard & Poor’s 500 index added 6.12 points, or 0.7%, to 841.44.
Trading was very light ahead of the upcoming flood of quarterly financial reports, with many traders out for the Columbus Day holiday. The Treasury market was shut for the holiday.
Winners led losers by 16 to 15 on the New York Stock Exchange and Nasdaq.
“There’s a little bit of a follow-through from last week’s momentum,” said Bob Basel, senior trader at Salomon Smith Barney.
Traders noted, however, that the market was at five-year lows as recently as Wednesday, and a string of disappointing profit reports this week could spark a new round of selling.
About 150 members of the S&P; 500 are set to report earnings this week. Chip leader Intel and health-care products maker Johnson & Johnson are due to report today, while IBM is expected to report Wednesday and Microsoft on Thursday.
Drug stocks helped fuel Monday’s rise. Dow member Merck rose $2.30 to $49.60 after a federal court ruled late Friday that Andrx and three other generic makers infringed on AstraZeneca’s patents for the heartburn drug Prilosec. AstraZeneca climbed $4.05 to $36.60, while Andrx fell $7.99 to $12.
Banc of America’s resident bear Thomas McManus added to the upbeat mood when the strategist raised his recommended stock weighting to 70% of a model portfolio from 65%, saying last week’s surge was a signal that the market may be reaching a bottom.
In other highlights Monday:
* Oil and oil-services companies rallied as crude oil had its biggest gain in three weeks. Amerada Hess gained $1.98 to $65.50 and Occidental Petroleum advanced 79 cents to $29.19. Among drilling companies, Nabors Industries gained $2.45 to $34.30, BJ Services rose $1.48 to $28.80 and Rowan climbed $1.33 to $20.33.
* General Motors, Ford Motor and Delphi fell after Merrill Lynch lowered its rating on the stocks to “neutral” from “buy.” A worsening outlook for the auto industry will result in narrower profit margins, the firm said. GM, the world’s biggest carmaker, dropped $1.56 to $33.26. Ford, No. 2 in the U.S., declined 39 cents to $7.93. Delphi lost 51 cents to $7.01.
* Pilgrim’s Pride shares were the second-biggest percentage losers on the NYSE. The stock tumbled $1.73, or 25%, to $5.28 after the No. 2 U.S. poultry producer launched the largest U.S. meat recall in history, due to possible listeria contamination.
* Some Asian markets managed gains despite the bombing in Bali, but Indonesia’s stock market lost more than 10%. European markets also were lower, with key indexes down 2.8% in Germany and 0.6% in France and Britain. Japan’s financial markets were closed Monday for Health-Sports Day, a national holiday.
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Bloomberg and Reuters were used in compiling this report.
Market Roundup, C8-9
