Stocks climb as investors cheer better-than-expected regional manufacturing report.
June 16, 2003: 11:56 AM EDT
By Meghan Collins, CNN/Money Staff Writer
NEW YORK (CNN/Money) - Stocks moved solidly higher Monday, adding to more than three months of gains, as investors viewed a much stronger than expected reading on regional manufacturing activity as the light in the dark they've been waiting to see for months.
New York Empire State Index came in at a surprising 26.8 for June, more than three times what economists expected and more than double May's reading of 10.6.
Just after 11:30 a.m. ET, the Nasdaq composite (up 27.10 to 1653.59, Charts) led the major indexes in gains, jumping more than 1.7 percent. The Dow Jones industrial average (up 138.74 to 9255.86, Charts) and the S&P 500 index (up 15.30 to 1003.91, Charts) each scored about 1.5 percent in gains.
"I think this New York manufacturing report was encouraging," said Douglas Altabef, managing director at Matrix Asset Advisors. "There is very likely to be continued ebb and flow depending on the 'news du jour.' But, clearly, any favorable economic news is going to have a positive effect on the market."
Stocks have rallied over the past three months on the belief that the economy is bound to bounce back in the second half of the year. Most economic reports, however, have indicated that growth remains tepid and the labor market is still contracting. But Wall Streeters have stubbornly ignored the data, finding silver linings in every bit of bad news that has come the market's way and turning whatever good news there has been into hefty gains for stocks.
Traders said they were looking ahead to the Federal Reserve's decision on interest rates at its two day meeting beginning June 24. Most are anticipating some kind of rate cut, and say that if the Fed does not change rates, or cuts back too much, it could be taken negatively by investors.
The market also is entering corporate warning season, ahead of the close of the second quarter. Traders said investors will be paying close attention to which, and how many, companies lower their fiscal estimates.
Corporate news aids rally
But, Monday a few upbeat pieces of corporate news supported the market's climb.
Yahoo! (YHOO: up $1.68 to $30.40, Research, Estimates) jumped more than 5 percent after Soundview Technologies upgraded the stock to "outperform" from "neutral."
Pouring a bit of cold water on the tech stock rally, Lehman Brothers downgraded the sector to "neutral" from "overweight," saying earnings revisions have run well ahead of those for the rest of the market.
But that didn't stop J.D. Edwards (JDEC: up $0.64 to $13.67, Research, Estimates)' stock from climbing more than 4 percent after PeopleSoft (PSFT: up $0.05 to $16.97, Research, Estimates) reaffirmed its commitment to a merger with the company and increased its offered price. PeopleSoft, which originally made its offer of $14.10 a share on June 2, said Monday it would offer $14.33 per for each Edwards share -- totaling about $1.75 billion.
About a week after PeopleSoft had announced the J.D. Edwards deal, Oracle (ORCL: up $0.12 to $13.60, Research, Estimates) made an unwelcome $5.1 billion offer to buy PeopleSoft, a deal which, if it is completed, will likely derail the J.D. Edwards acquisition.
Elsewhere in the market, Pfizer (PFE: up $1.24 to $34.32, Research, Estimates) gained more than 3 percent after the company said its cholesterol lowering drug, Lipitor, significantly reduced strokes and heart attacks in patients with type II diabetes, which prompted the company to halt its trials early.
Caterpillar (CAT: up $1.61 to $57.66, Research, Estimates) was one of the Dow 30's leading gainers, up nearly 3 percent, after Credit Suisse First Boston raised it's target price on the company to $65 from $59 a share.
Fellow Dow component Boeing (BA: up $0.55 to $35.89, Research, Estimates) also fed into the rally. Shares of the aircraft maker rose 2 percent after its head of commercial jets said Saturday that global airline traffic is likely to pick up this year. The American Stocks Exchange's airline index rose more than 2.5 percent Monday.
Market breadth was positive and trading volume was relatively light. On the New York Stock Exchange advancing issues outnumbered decliners by nearly three to one as 498 million shares changed hands. On the Nasdaq, where volume stood at 805 million shares, gainers held a nine-to-five lead over losers.
Bond yields tipped lower, with the 10-year Treasury note yielding 3.11 percent as its price climbed 1/32 of a point. The dollar was slightly higher against the yen and the euro.
European stock markets were mostly higher late in the day, while Asian stocks finished their overnight session mixed.
Light sweet crude oil futures gained 17 cents to $29.50 a barrel in New York, where gold climbed $1.70 to $358.90 an ounce.
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