U.S. stocks shoot higher on rising hopes of no rate hike
NEW YORK - Stocks shot higher Monday with the Dow Jones industrial average hitting its highest level in nearly three months on growing optimism the Federal Reserve will not hike interest rates any time soon.
The technology-led rally was an extension of last Friday's run-up on a tame U.S. jobs report, which many Wall Streeters took as a sign that the U.S economy is finally slowing enough to keep the inflation-wary central bank from again raising interest rates.
The Fed, which has boosted rates six times since June 1999 to inoculate the economy against inflation, next meets on Aug. 22.
"I think that people now think that there won't be any type of tightening in August,'' said Francis Gannon, senior portfolio manager at SunAmerica Asset Management. "The picture for the market, which in general had been pretty cloudy, is starting to clear up a bit, at least from a Fed standpoint.''
The technology-stacked Nasdaq composite index ended up 75.63 points, or 2.00 percent, at 3,862.99, based on the latest figures available, and building on its 27-point gain from Friday.
Data networking company Cisco Systems Inc. was the Nasdaq's most heavily traded stock, rising 11/16 to 66-1/4 ahead of its earnings, expected on Tuesday.
The Nasdaq's semiconductor names also swung higher with the Philadelphia Stock Exchange Semiconductor index up 3.58 percent.
Computer chip bellwether Intel Corp. erased an early loss, gaining 3/8 to 62-15/16. Semiconductor stocks have had a bumpy ride in recent weeks as analysts have provided conflicting outlooks for the fast-growing industry.
The Dow , meanwhile, was up 99.26 points, or 0.92 percent, at 10,867.01 after gaining 61 points Friday. The Dow had its highest close since May 16, when it finished at 10,935.
The Dow's tech components did most of the heavy lifting, with personal computer heavyweight Hewlett-Packard Co. up 3-9/16 at 115-5/16, rival International Business Machines Corp. up 7/16 at 116-5/16, and software giant Microsoft Corp. up 7/8 to 70.
Industrial conglomerate Honeywell International also helped the Dow, gaining 2-1/8 to 35-11/16 after the European Commission gave a green light for its MyAircraft.com joint venture with United Technologies Corp.
But the blue-chip gauge's rally was held back some by weakness in its financial services stocks, which fell after last week's strong gains.
The Wall Street brokerage house J.P. Morgan & Co. Inc. pared its earlier loss but ended off 13/16 at 142-7/16. American Express Co.was down 1-1/8 at 58-13/16.
The Standard & Poor's 500 index, a broader measure of the market, was up 16.39 points, or 1.12 percent, at 1,479.32.
"People are starting to feel that'' the Fed is going to hold in August, said Rick Meckler, senior managing director at Liberty View in Jersey City, N.J. "There aren't a lot of economic numbers coming out this week. There is continued merger news and generally good earnings news.''
On the New York Stock Exchange, advancers outpaced decliners 17 to 11 with 854 million shares changing hands. On the Nasdaq, advancers beat decliners 22 to 17 with 1.3 billion shares traded.
Meanwhile, traders were upbeat ahead of a number of high-profile earnings from the technology sector.
Internet stocks held their ground, with the American Stock Exchange Internet index up 2.79 percent, despite some negative comments from a Wall Street analyst.
Merrill Lynch analyst Henry Blodget said many Internet sector companies were moving to a pace of long-term growth from a period of hyper-growth.
In other news, medical device company EndoSonics Corp. climbed 3-3/8 to 10-9/16 after the Dutch medical technology company JOMED N.V. said it would buy EndoSonics for $205 million.
Online retailer Barnesandnoble.com rose 1-7/16 to 5-3/16 after saying it is teaming up with Microsoft to open the first major Internet store selling digital books.
Despite the uptick in the market, stocks are expected to be wobbly in the coming weeks as Wall Street dissects economic data ahead of the Fed's next meeting, traders said.
The flow of news on the economy was light. Wall Street largely ignored a report that consumers hiked their credit purchases up by a much stronger-than-expected amount in June despite higher interest rates.
Traders were more concerned with several economic reports scheduled for later in the week, including preliminary second-quarter productivity and unit labor cost data Tuesday and producer price and retail sales for July Friday.
"People are going to be nervous until we see what these numbers look like,'' said James Volk, co-director, institutional trading at D.A. Davidson and Co. |
