Strong start to final week of 2003
By Michael Baron, CBS.MarketWatch.com
Last Update: 1:49 PM ET Dec. 29, 2003
NEW YORK (CBS.MW) - U.S. stocks rallied Monday, getting the final trading week of 2003 off to a bullish start.
Broad buying carried the Dow Jones Industrial Average ($INDU: news, chart, profile) about 74 points higher, a gain of 0.7 percent, to 10,399. 27 of the index's 30 components were on the rise, led by Alcoa, Altria, AT&T, Boeing, Eastman Kodak, Intel, International Paper, and SBC Communications.
The Nasdaq Composite ($COMPQ: news, chart, profile) added about 21 points, or 1 percent, to 1,993.74.
The S&P 500 index ($SPX: news, chart, profile) tacked on 0.7 percent to 1,104, and the Russell 2000 index ($RUT: news, chart, profile) of small-cap stocks surged 1.3 percent to 562.
Earlier in the session the Dow hit a 19-month high of 10,400.45, while the Nasdaq Composite got within 6 points of 2,000, a level it reached in early December for the first time in two years.
Volume was a light 600 million on the New York Stock Exchange, and 877 million on the Nasdaq. Breadth in the wide market was positive with advancers ahead of decliners 24 to 8 on the Big Board, and 22 to 10 on the Nasdaq. The strongest sectors were precious metals, chips, and financials.
Five Dow components hit 52-week highs: Alcoa, Boeing, Exxon Mobil, Honeywell, and International Paper.
Andy Brooks, head of equity trading at T. Rowe Price, said the move is representative of the influence of holiday cheer during a very quiet session.
"By and large, the news is positive, and the economy is perking along so unless we have some sort of terrorist activity or some other negative event, I would expect the positive momentum to continue through the week," he said. Hear full interview.
Continued weakness in the U.S. dollar against the euro and yen was overlooked. See full story.
Treasury prices fell as stocks rose and investors kept a lookout for information on the factory sector from the U.S. Institute of Supply Management due later in the week. See full story.
Gold futures climbed above $415 an ounce to a fresh eight-year high as the dollar dipped to multi-year lows against the euro, lifting gold's investment prospects. See full story.
Natural-gas futures fell mild Christmas week weather feeding the market's perception that storage levels are adequate to meet U.S. demand. See full story.
Further evidence of improvement in the job market came as the Conference Board said help-wanted advertising rose in November for the first time since June.
The help-wanted index rose to 39 in November from 37 in October. The index stood at 40 one year ago. Ads for job openings rose in seven of nine U.S. regions over the past three months. "The labor market is finally sparking to life," said Ken Goldstein, an economist with the organization.
Benchmark indexes in Japan, the U.K., Germany and France all logged gains. See full story.
Dip makes McDonald's a bargain
Dow component McDonald's (MCD: news, chart, profile) got a respectable 1.2 percent bounce after J.P. Morgan raised its rating on the fast food giant to "overweight", saying the recent big drop in the shares due to the mad-cow scare presents a buying opportunity.
"We believe mad-cow will cause very slight consumer reaction beyond the immediate term - assuming discovery of future cases is limited - but that the downward pressure on beef prices will be immediate, erasing a previous investment negative for the restaurant industry in 2004," the firm told clients.
Stocks of certain biotech companies that stand to benefit from the concern about mad-cow disease in the U.S. also rallied after the Department of Agriculture expanded its beef recall over the weekend. See full story.
Also cattle futures dropped to their expanded "limit-down" levels, or lowest allowable drop, on the Chicago Mercantile Exchange, due to concerns over last week's discovery of mad-cow disease in the U.S.
Strong Q4 for AMD?
Shares of Advanced Micro Devices (AMD: news, chart, profile) rose more than 3 percent after the company was the subject of positive comments by Sanford Bernstein. The firm said the semiconductor maker's fourth quarter was "tracking above consensus expectations" due to strength in both PC processor and flash memory businesses.
The comments may be giving a boost to Intel (INTC: news, chart, profile), whose 1.8 percent rise was nearly the biggest positive percentage move in the Dow. As for the sector as a whole, the Merrill Lynch Semiconductor Holdrs (SMH: news, chart, profile) was up 1.7 percent.
Lehman sees Fed on hold until 2005
Saying the market's focus has switched from wondering if the Federal Reserve will raise rates to when it will do so, Lehman Bros. weighed in with its opinion, telling clients it believes the Fed will remain on hold until 2005.
Although the firm thinks it is "still too early to position for a Fed tightening cycle," it did say analysis "casts support for over-weighting equities in general and cyclical industries in particular" in the year prior to the move.
Smith Barney said it believes a combination of rising production, cost containment, a weaker dollar and cautious expectations suggest Wall Street's earnings expectations remain low for both the fourth quarter and 2004.
"Street estimates for 4Q03 have moved up very slightly since October in spite of an improving economic outlook," wrote equity strategist Tobias Levkovich. "Pre-announcement trends also point to a good quarter, with cyclical companies and the energy sector appearing poised for particular strength."
Levkovitch went on to say that, longer term, the market only be trading 10 percent above current levels by 2007.
Steel cos. continue rally; Trinity Biotech gets positive FDA news
Steel companies topped both the NYSE and the Nasdaq percentage gainers lists. Oregon Steel Mills (OS: news, chart, profile) surged more than 15 percent to $6.37, while Niagara Corp. (NIAG: news, chart, profile) leapt almost 23 percent to $6.85.
Volume reached 1,03 million shares for Oregon Steel, and 623,000 shares for Niagara, well beyond the issue's respective full-day averages of 123,700 and 21,000.
Also, shares of Ireland's Trinity Biotech PLC (TRIB: news, chart, profile) soared more than 43 percent after the company said its Uni-Gold Rcombigen HIV test was approved by the U.S. Food and Drug Administration.
Uni-Gold is the first HIV test device to be approved for use with human serum, plasma and whole blood, according to the company.
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