Market surges, bounces back after two weeks of declines. Strong dollar, economic optimism factor in.
November 24, 2003: 7:13 PM EST
By Alexandra Twin, CNN/Money Staff Writer
NEW YORK (CNN/Money) - U.S. stocks snapped back from a two-week selloff Monday, as optimism about the economy and a recovery in the dollar inspired buyers.
The Nasdaq composite (up 53.26 to 1947.14, Charts) gained 2.8 percent, the Standard & Poor's 500 (up 16.80 to 1052.08, Charts) index gained around 1.6 percent, and the Dow Jones industrial average (up 119.26 to 9747.79, Charts) gained around 1.2 percent Monday.
Stock markets closed lower last week for the second time in a row, setting the major indexes up for something of a bounce Monday. The gains Monday proved sufficient to wipe out all of last week's declines.
How the market performs in the next few sessions of this holiday-shortened week depends in part on the economic news, analysts said.
"It's going to be a light volume week, Wednesday and Friday in particular," said Douglas Altabef, managing director at Matrix Asset Advisors. "The market is up partly today on anticipation that the economic news will be good in the next few days, so if it disappoints in some way, you could see a pullback. But if the durable goods orders report (due Wednesday) is upbeat, if the GDP (gross domestic product) number is revised up tomorrow, that could give the market a little more of a bounce."
The week's most-anticipated report is likely Tuesday's revised read on GDP growth in the third-quarter, expected to clock in at 7.6 percent, according to a Briefing.com survey of economists, up from an initial increase of 7.2 percent.
The November reading on consumer confidence and the October report on existing home sales are also due out on Tuesday. Wednesday brings at least nine economic reports, including durable goods orders for October, personal income and spending for October, new home sales for October and the University of Michigan's revised reading on consumer sentiment in November.
Trading volume was light on Monday and was likely to remain so during the rest of the week, analysts said, due to the holiday. Stock markets will be closed Thursday for Thanksgiving, and will close early, at 1:00 p.m., on Friday.
The Treasury bond market will close early the day before Thanksgiving, will remain closed on Thanksgiving, and will close early again the day after. Commodities markets will close early the day before Thanksgiving and will remain closed on the holiday and the day after.
Monday's market
The recovery in the U.S. currency may have added to the session's gains. The dollar rallied against the euro and gained against the yen. Last week, the dollar hit an all-time low versus the euro amid fears that Washington would adopt a protectionist strategy toward the currency. Comments from a U.S. official early Monday stating that the Bush administration would not adopt such a strategy seemed to reassure dollar investors.
"Last week was down, so some of today is a reaction to that, with a bit of a bounce," said Michelle Clayman, chief investment officer at New Amsterdam Partners.
Market breadth was solidly positive with nearly three stocks rising for every one that fell on the New York Stock Exchange, and more than 11 stocks rising for every five that fell on the Nasdaq. Some 1.29 billion shares traded on the NYSE and 1.76 billion shares changed hands on the Nasdaq.
Buying covered a variety of sectors, with 28 out of the 30 Dow components gaining.
Many of the big-cap technology shares that led the decline last week rebounded Monday. Intel (INTC: up $1.14 to $33.46, Research, Estimates) gained 3.5 percent, Sun Microsystems (SUNW: up $0.16 to $4.24, Research, Estimates) gained 3.9 percent, while Microsoft (MSFT: up $0.62 to $25.73, Research, Estimates) gained 2.5 percent and was the Nasdaq's most-active issue.
Among the day's corporate news, Dow component Boeing (BA: up $0.03 to $38.89, Research, Estimates) fired its chief financial officer, Michael Sears, and another Boeing executive, Darleen Druyun, for unethical conduct related to Druyun's hiring. The stock closed little changed.
In addition, Time Warner (TWX: up $0.32 to $15.87, Research, Estimates), CNN/Money's parent, agreed to sell its music division for $2.6 billion to an investor group led by Thomas H. Lee Partners and Edgar Bronfman Jr. as part of a debt-cutting strategy that involves shedding what it sees as non-core assets. The stock bounced about 2 percent.
Treasury prices fell, sending the 10-year note's yield up to 4.23 percent from 4.16 percent late Friday.
NYMEX light sweet crude oil futures tumbled $1.87 to settle at $29.74 a barrel. COMEX gold fell $4.50 to settle at $392.70.
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