Economic Data Vie With War Fears in Modest Rally
Blue-chip stocks rose Monday after surprisingly strong data on the U.S. manufacturing sector lifted hopes that economic growth will gather steam this year. But war fears kept investors’ enthusiasm in check.
“The early returns from January are showing a much stronger economy than the one in the fourth quarter of last year,” said Rich Nash, chief market strategist at Victory Capital Management. “That’s encouraging.”
The Dow Jones industrial average rose 56.01 points, or 0.7%, to 8,109.82, and the broader Standard & Poor’s 500 index climbed 4.62 points, or 0.5%, to 860.32. The tech-heavy Nasdaq composite index advanced 2.88 points, or 0.2%, to 1,323.79.
Winners outnumbered losers by 8 to 7 on the New York Stock Exchange. But losers held a 6-to-5 edge on Nasdaq. Trading volume was below recent levels.
The NYSE suspended trading for two minutes to commemorate the loss Saturday of the space shuttle orbiter Columbia and its seven crew members. Shares of shuttle program contractors such as Boeing, Lockheed Martin and Alliant Techsystems sagged on the first trading day after the disaster.
Investors remained wary because of uncertainty over a possible U.S.-led war with Iraq. Such jitters spurred a sharp sell-off last month that put major market gauges into negative territory for the year.
“War is going to continue to be the big issue overhanging the market, and until we get through that, it’s going to be hard for the market to establish a pattern of moving higher,” said Peter Gottlieb, portfolio manager at First Albany Asset Management.
British Prime Minister Tony Blair said there was unmistakable evidence that Iraq was withholding cooperation from U.N. inspectors. Secretary of State Colin L. Powell pledged to provide proof this week that Iraq possesses banned weapons, and investors already were bracing for his meeting Wednesday with the U.N. Security Council.
On the economic front, the Institute of Supply Management index of manufacturing activity expanded in January for the third straight month. In addition, spending on new construction jumped an unexpected 1.2% in December because of a surge in residential building, the government said.
Bond yields rose on the economic reports. The yield on the benchmark 10-year Treasury note closed at 4%, up from 3.96% on Friday.
In commodities trading, near-term oil futures in New York slid 75 cents to $32.76 on news that output by Venezuela’s strike-hobbled petroleum industry had reached more than half its pre-strike levels and OPEC officials’ warning of possible oversupply next quarter.
Platinum futures soared $24.80 to $683.70 an ounce in New York. Prices for the metal, used in vehicle antipollution systems, have been rising in part on hopes that President Bush’s pledge to spend $1.2 billion on fuel-cell technology will boost demand.
In other highlights:
* Among stocks joining the broad market’s rise, film giant Eastman Kodak gained $1.30 to $31.60, and home improvement retailer Home Depot added 48 cents to $21.38. Both boosted the Dow after favorable comments by Legg Mason Value Trust manager Bill Miller in Barron’s.
* Shares of the Big Three auto companies edged higher despite reports showing that vehicle sales generally slowed in January. General Motors rose 43 cents to $36.76, even though sales fell 2%; likewise, DaimlerChrysler rose 89 cents to $31.49 despite a 12% drop in sales. Ford Motor rose 9 cents to $9.20 after posting an unexpectedly strong 4.1% sales gain.
* Accredo Health, which distributes biotechnology products to the chronically ill, tanked $8.01, or 21%, to $29.50. The company said quarterly net income more than doubled but warned that revenue would be lower than expected for its fiscal year, in part because of slower sales of some products.
* Managed-care provider Humana sank 56 cents to $9.38. The company posted a quarterly net loss, reflecting severance costs from job cuts, charges related to acquisitions and other items.
