Bargain hunters lift stocks
U.S. stocks rose modestly Monday as bargain hunters moved in after the market’s worst weekly loss in five years.
A sharp jump in General Motors’ stock after positive comments from a brokerage helped the Dow Jones industrial average offset a nearly 12% drop in shares of insurance titan American International Group.
The Dow, which was down as much as 113 points early in the session, rebounded to close with a gain of 57.88 points, or 0.5%, to 12,240.01.
In the broader market the Standard & Poor’s 500 index rose 7.84 points, or 0.6%, to 1,339.13.
Winners had a narrow edge over losers on the New York Stock Exchange.
The technology-heavy Nasdaq composite added 15.21 points, or 0.7%, to 2,320.06, its third straight gain.
“It’s not a bad time to look at technology stocks right now, as long as you have some patience,” said Jeffrey Davis, who helps manage about $4.8 billion as chief investment officer at Lee Munder Capital Group in Boston.
In the tech sector, IBM rose $1.87 to $105.14, Apple rallied $3.97 to $129.45 and Google inched up $4.47 to $521.16.
In other markets a key index of commodity prices hit a fresh record high, helped by rallies in oil and precious metals. The Reuters-Jefferies CRB commodity index added 0.6% to 377.99. It is up 5.4% this year.
Stocks had tumbled last week, led by renewed selling in financial issues as investors focused on reports that suggested a worsening of the credit crunch stemming from the mortgage market debacle.
Also last week a report on the services sector of the U.S. economy suggested a sharp contraction of activity in January.
The Dow lost 4.4% for the week, although it stayed above its recent 52-week closing low of 11,971 reached Jan. 22.
Declining trading volume in the last two weeks indicates sellers are running out of steam, some analysts say.
“You’ve had some measure of indiscriminate selling such that you can find real attractive value opportunities,” said Christian Andreach, who helps manage more than $15 billion at Manning & Napier Advisors in Fairport, N.Y.
Wall Street seemed to largely ignore another steep sell-off in Asian markets overnight. The Hong Kong market slumped 3.6%. South Korean shares slid 3.3%.
Also, the market quickly shook off the problems at American International Group, which sank $5.94 to $44.74 after the firm’s auditor found that faulty accounting may have understated recent losses on insurance AIG wrote on mortgage-backed bonds and other securities.
Among Monday’s market highlights:
* GM, which is expected to report a fourth-quarter loss today, got a boost after Burnham Securities analyst David Healy said the company might earn $12.75 a share by 2010, helped by rising output abroad and a cost-saving labor contract.
GM shares jumped $1.32, or 5.1%, to $27.12.
* Energy stocks attracted buyers as crude oil futures in New York rose $1.82 to $93.59 a barrel, the third straight gain.
Chevron rallied $1.17 to $80.43. The stock will be added to the Dow index Feb. 19, replacing Honeywell International, Dow Jones & Co. said Monday. Among other energy issues, Exxon Mobil rose $1.51 to $83.22 and Transocean jumped $3.10 to $128.28.
* Battered retail stocks continued their recent rebound. J.C. Penney jumped $2.32 to $49.95. The shares now are up 44% since Jan. 8. Also, Kohl’s gained $2.40 to $47.07 and Guess was up $1.95 to $39.66.
* Darden Restaurants shot up $2.15, or 8%, to $29.01. The owner of the Red Lobster and Olive Garden chains said profit in its fiscal third quarter ended Feb. 24 might exceed analysts’ estimates.
* Financial issues were mostly weaker on the AIG report and after insurer CNA Financial said fourth-quarter profit fell 50% amid heated competition in the commercial insurance business and because of losses on sub-prime mortgage-related securities the firm held. CNA plummeted $6.16 to $26.07.
CNA’s parent company, Loews, fell $3.73 to $41.
Among other insurers, Prudential Financial slid $4.51 to $67.36 and Hartford Financial dropped $3.40 to $70.99.
* Near-term gold futures rose $4.50 to $922.90 an ounce as the dollar’s value eased.
Platinum continued to soar, gaining $55.40 to a record $1,939.40 an ounce. Platinum production by major miners in South Africa has been declining because of an electric-power shortage in that nation.
Stephen Briggs, a Societe Generale analyst, said in a report that platinum’s supply and demand fundamentals were “increasingly tight.”
* In the Treasury bond market, yields retreated for a second session. The 10-year T-note yield ended at 3.61%, down from 3.64% on Friday.
