Stocks open higher on reports CIT close to rescue
Stocks jumped Monday, giving the Dow Jones industrials their sixth straight advance, on another batch of upbeat earnings reports and more data suggesting the end of the recession is approaching.
Word that commercial lender CIT Group had struck a deal to keep out of bankruptcy also drove share prices higher.
The Dow Jones industrial average rose more than 100 points, putting it in the black for the year. The Standard & Poor’s 500 climbed 1.1% to its highest finish since November.
The Conference Board, a research group, reported that its index of leading economic indicators rose 0.7% in June, bolstering the argument that the economy is heading for a recovery. It was the third straight monthly increase in the predictor of future economic activity. Economists had expected on average a gain of 0.4%.
Meanwhile, CIT’s reported deal with bondholders, which the company confirmed after the market closed, stoked investors’ growing sense of optimism, which got a big boost last week from a string of good earnings news.
The CIT news was another sign that the economy and the markets are healing, said George F. Shipp, chief investment officer at Scott & Stringfellow in Virginia Beach, Va.
“The private sector is stepping in where the taxpayer didn’t have to this particular time. That’s the way it’s supposed to work,” he said.
CIT shares jumped 55 cents, or 79%, to $1.25.
The Dow rose 104.21 points, or 1.2%, to 8,848.15, its highest close since Jan. 6. The blue-chip gauge’s six-day winning streak is its longest since April 2007.
The S&P; 500 rose 10.75 points, or 1.1%, to 951.13, its best finish since Nov. 5.
The Nasdaq composite index rose 22.68 points, or 1.2%, to 1,909.29, marking its ninth straight advance.
The index is at its highest mark since Oct. 3.
The Russell 2,000 index of smaller companies climbed 1.5%.
Advancing stocks outnumbered decliners by more than 3 to 1 on the New York Stock Exchange.
Major stock indexes shot up about 7% last week after a monthlong slide driven by discouraging reports on the economy. Solid earnings reports and forecasts from leading companies including Goldman Sachs Group, Intel and IBM gave investors hope that the worst of the recession could be past.
Quarterly reports are due today from industrial equipment maker Caterpillar and drug maker Merck.
Among the companies reporting earnings Monday was toy maker Hasbro, whose results beat analysts’ expectations and helped reassure investors somewhat about consumers’ willingness to spend.
Hasbro shares jumped 4.2%.
Oilfield service giant Halliburton said its profit tumbled 48% on sluggish exploration and production activity, but the results were better than analysts had forecast. Its stock gained 4.4%.
