Survey of Executives Gives Boost to Markets
Wall Street on Tuesday recouped all or most of Monday’s decline, as buyers returned amid some upbeat forecasts from leading U.S. chief executives.
Stocks scored their fourth gain in five sessions as bonds stabilized and oil prices eased.
The Dow Jones industrial average rose 63.77 points, or 0.6%, to 10,830.00, taking back most of Monday’s 75-point loss.
The Standard & Poor’s 500 index gained 6.81 points, or 0.6%, to 1,210.41, after losing nearly eight points Monday.
Strength in semiconductor stocks lifted the Nasdaq composite index 19.53 points, or 1%, to 2,071.25. It had fallen 0.7% on Monday.
Investors continued to favor small and mid-size stocks. The S&P; 600 small-cap index rose 0.7% to a record 332.30; the S&P; 400 mid-cap index was up 0.8% to a record 672.48.
Rising stocks outnumbered losers by 9 to 5 on the New York Stock Exchange and by 3 to 2 on Nasdaq.
The Business Roundtable, an association of the nation’s biggest companies, said Tuesday that its latest survey of 118 chief executives found that 60% planned new investments in plants and equipment in the next six months, up from 50% in the last quarterly survey.
The report helped offset a separate monthly survey by the Institute for Supply Management that showed U.S. factory output continued to grow in January, but at a slower rate than in December.
The CEO survey indicated that executives were “seeing good prospects for 2005,” said Lincoln Anderson, chief investment officer at LPL Financial Services, a Boston-based brokerage.
Another report also suggested more bullishness in the boardroom: S&P; said 239 U.S. companies raised cash dividend payments in February, 25% more than the 191 that did so in January. Firms’ willingness to share more profit with stockholders via dividends is a sign of rising optimism, some analysts say.
A relatively calm bond market helped buoy the stock market. Wall Street’s slump on Monday had been triggered partly by another jump in bond yields.
On Tuesday the benchmark 10-year T-note ended at 4.37%, off slightly from the three-month high of 4.38% on Monday.
In commodity trading near-term oil futures in New York slipped 7 cents to $51.68 a barrel.
But a broad index of commodity prices hit a 24-year high. The Reuters-CRB index edged up to 305.26 from 305.00 on Monday. The index hasn’t been at current levels since the last commodity boom, in 1981.
Financial markets’ next big test could come on Friday, when the government reports on February employment.
Among Tuesday’s highlights:
* Many industrial stocks were helped by excitement over business capital spending plans. Eaton gained $1.28 to $71.03, Illinois Tool Works jumped $1.53 to $91.28 and Textron was up 98 cents to $78.33.
Caterpillar rose $2.32 to $97.37 after saying it will boost machinery prices 1% to 5% in late spring to cover rising costs of steel and other materials.
* Semiconductor shares rallied as J.P. Morgan Securities and Lehman Bros. upgraded the sector. Chip companies also could benefit from a continued upturn in capital spending.
Intel was up 63 cents to $24.62, its highest since mid-November. International Rectifier rose $1.20 to $45.20 and Xilinx gained $1.04 to $31.24.
* In the biotech sector, Biogen Idec added $2.61 to $41.26 after diving $28.63 on Monday, when the company and partner Elan said they suspended sales of a highly touted multiple sclerosis drug because of a patient’s death. Elan continued to lose ground, off 3 cents to $7.97.
* Insurance broker Marsh & McLennan edged up 35 cents to $33 despite slashing its dividend by 50% after reporting a $676-million quarterly loss from settling New York Atty. Gen. Eliot Spitzer’s bid-rigging charges.
* Federated Department Stores surged $4.53 to $60.98 after some analysts gave an upbeat view of the company’s planned purchase of May Department Stores.
* Johnson & Johnson rose $1.05 to a record $66.65. Merrill Lynch raised the stock’s rating to “buy” from “neutral,” citing strong growth expectations.
* On the downside, oil stocks pulled back after hefty recent gains. Murphy Oil lost $2.63 to $97.41; Unocal fell $1.19 to $52.91.
