Investors Go Bargain Hunting
Wall Street enjoyed a modest rebound Monday after three weeks of losses, advancing as investors felt more optimistic about the economy and indulged in a little bargain hunting. Falling oil prices and a strengthening dollar also spurred buying.
Although Dow Jones industrial component General Motors suffered from a new round of bad news, an $11.3-billion leveraged buyout of SunGard Data Systems showed that the recent wave of acquisition activity would continue.
The economy, however, was foremost on investors’ minds. There was no significant economic data released Monday, so the market was anxiously awaiting gross domestic product and employment numbers later in the week and hoping they would show the economy has enough strength to overcome inflation.
“Investors are cautiously putting a foot back into the market,” said Michael Sheldon, chief market strategist at Spencer Clarke. “The market appears to be oversold, but investors are going to need some sort of catalyst, whether it’s falling oil prices or earnings or some of the economic data coming out this week, to really have the confidence to push things higher.”
The Dow Jones industrial average rose 42.78 points, or 0.4%, to 10,485.65. The Dow has fallen more than 1% in each of the last three weeks.
Broader stock indicators also gained ground. The Standard & Poor’s 500 index was up 2.86 points, or 0.2%, at 1,174.28, and the Nasdaq composite index climbed 1.46 points, or 0.07%, to 1,992.52.
Investors were also cheered as the dollar gained ground against most major currencies. The dollar climbed to five-month highs against the Japanese yen Monday in thin post-Easter holiday trading.
The dollar traded at 107.14 yen, up from 106.33 on Thursday. The euro fell to $1.288, from $1.293. Most major world markets were closed for Good Friday, and European markets remained closed Monday.
The dollar has been rebounding since last Tuesday, when the Federal Reserve boosted interest rates by a quarter-point and issued a hawkish statement on stronger inflationary pressures. The Fed is expected to make further rate increases throughout the year. Higher U.S. interest rates tend to help the dollar by making assets denominated in the currency more attractive to investors.
Crude oil futures continued their slow retreat, with a barrel of light crude settling at $54.05, down 79 cents, in New York.
Bonds continued their slide, sending yields -- which move in the opposite direction to price -- higher. The yield on the benchmark 10-year Treasury note rising to 4.64%, up from 4.59% on Thursday.
In other market highlights:
* Tiffany jumped $1.74 to $34.35 on a Barron’s report that the company may fetch $40 to $50 a share in a takeover. The newspaper cited money manager and investor Shawn Krevetz of Esplanade Capital in Boston, who said Coach would be a good match for Tiffany. Coach rose 68 cents to $57.05.
* Jones Apparel Group gained $1.32 to $33.08. A New York appeals court upheld a judge’s finding that Polo Ralph Lauren violated a contract, paving the way for a separate trial on damages. Polo Ralph Lauren fell $1.26 to $38.77.
* Sears Holdings fell $1.41 to $131.11. Standard & Poor’s assigned the junk grade BB-plus to the company, created by Kmart Holdings’ purchase of Sears, Roebuck & Co., because it faces difficulty improving profit.
* With oil prices lower, an S&P; 500 measure of retailers advanced 1.3%. Home Depot climbed 56 cents to $38.59.
* SunGard Data Systems rose $2.81 to $34.36, after the company announced it would be purchased by a consortium of seven private equity groups.
* GM was downgraded to “reduce” from “neutral” by UBS due to concerns over the automaker’s liquidity and questions about whether the company could continue offering dividends to its shareholders. GM slipped 93 cents to $28.37.
* Pharmaceutical services company AmerisourceBergen tumbled $7.08 to $54.03, after it lowered its earnings forecasts for the quarter and the year.
