Stocks Rise on Spending News
A turnaround in personal spending and a flurry of acquisition activity sent stocks higher Monday, but it wasn’t enough to salvage a topsy-turvy month. The major indexes fell in October.
A Commerce Department report showing that spending rose 0.5% in September -- reversing a 0.5% decline the month before -- came as another sign of the economy’s resilience after hurricanes Katrina and Rita. Last week, the department reported better-than-expected gross domestic product growth of 3.8% for the July-September quarter.
Although the upswing in spending bolstered the retail and technology sectors, Steven Goldman, chief market strategist at Weeden & Co., also linked Monday’s rally to a broad recovery from last week’s lows and typical end-of-the-month trading as hedge funds and mutual funds tried to boost returns. He also cited strong gains in the European markets.
“Basically we had market sentiment get a bit too one-sided,” Goldman said about recent down days on Wall Street. “Stocks were getting in place to rebound.”
The Dow Jones industrial average rose 37.30 points, or 0.36%, to 10,440.07, after adding as much as 83 points late in the session.
Broader stock indicators also were higher. The Standard & Poor’s 500 index was up 8.60 points, or 0.72%, at 1,207.01, and the Nasdaq composite index surged 30.42 points, or 1.46%, to 2,120.30.
Advancing issues topped decliners by about 3 to 1 on the New York Stock Exchange.
Bond yields edged lower, as investors grew wary of making any big bets on the eve of today’s Federal Reserve policy meeting. The central bank is widely expected to raise its benchmark interest rate by a quarter of a percentage point, to 4%.
The yield on the U.S. Treasury’s 10-year note fell to 4.55% from 4.57% on Friday. Bond yields move in the opposite direction of their prices.
Wall Street finished October lower despite back-to-back trading days of sharp gains, closing out an erratic month when investors sold stocks on seemingly any data hinting at a slowing economy or a whiff of higher inflation. On Friday, the Dow climbed almost 173 points, its biggest one-day leap since late April.
For the month, the Dow fell 1.22%, Nasdaq lost 1.45% and the S&P; 500 was 1.77% lower.
Concerns about rising interest rates have haunted the market in recent weeks, with some afraid that the Federal Reserve will push rates too high and send the economy sliding.
“A lot of people are looking for the traditional November rally,” said Rick Pendergraft, an equity trader at Schaeffer’s Investment Research. “The more people look for it, the more concerned I am it won’t happen. Any info not expected out of the Fed ... could quickly halt the rally.”
The market also got an assist from lower oil prices. Crude sank $1.46 a barrel to $59.76 in New York trading, as forecasts for a warm winter triggered a wave of selling. Oil has not been below $60 a barrel since July 28.
An unexpected gain in the Chicago purchasing managers’ index also helped fuel the market’s momentum, with the index -- a measure of manufacturing activity -- climbing to 62.9 from September’s reading of 60.5. Economists were looking for a decline to 57.4.
In other market highlights:
* Wal-Mart rallied $1.81 to $47.31, for the best performance in the Dow average. The company said October same-store sales rose 4.3%, beating its forecast of 2% to 4%. Home Depot added 52 cents to $41.04.
* Barrick Gold, the world’s third-biggest gold producer, made an unsolicited $9.2-billion bid for Placer Dome, the fifth-biggest gold miner. Placer Dome shares surged $3.44 to $19.95; Barrick lost $1.95 to $25.25.
* Other companies involved in acquisitions include Honeywell International, the world’s largest maker of factory and airplane-cockpit controls. Honeywell added 60 cents to $34.20 after MacAndrews & Forbes Holdings agreed to buy Honeywell’s Clarke American check-printing services business for $800 million.
* Apple Computer increased $3.12 to a record $57.59. The maker of the iPod music player has sold more than 1 million videos that run on the devices since adding the programs less than three weeks ago.
* Google advanced $13.97 to $372.14 after a report in the New York Times described how the company was becoming one of the leading players in the world of advertising.
* Valero Energy rallied $5.74 to $105.24 after saying its earnings expectations for the current quarter are “significantly too low.”
* Kellogg reported that its quarterly profit rose 11% as cereal and snack-food demand drove sales up 7%. The company lifted its yearly outlook, but that figure and its 2006 forecast fell short of analyst views. Kellogg sank $2.29 to $44.17.
