NEW YORK (CNN/Money) -
Stocks rose Monday on renewed strength in the tech sector and end-of-quarter buying by money managers, but the market may be jittery Tuesday, especially after Sun Microsystems' earnings warning after-hours.
The Nasdaq composite (down 26.54 to 1798.02, Charts) jumped 1.8 percent Monday, reversing some of last week's losses, while the Dow Jones industrial average (down 90.29 to 9289.95, Charts) added 0.7 percent. The Standard & Poor's 500 (down 8.79 to 997.79, Charts) index closed up just under 1 percent.
"On a very short-term basis, you got a little oversold last week, and on a technical level, this is a pretty good place to get a bounce," said John Hughes, a market analyst at Epiphany Equity Research. "In the greater scheme of things, last week's movement was significant, in that it was a stronger wave of selling than we've seen in a while."
Stocks got pummeled last week, with the Nasdaq falling nearly 6 percent, as investors sought to take profits after the market's unusual September runup. Morning trade was shaky Monday, but buyers dove in around midday and remained there through the close, responding to news that the U.S. consumer remains resilient and is spending money quite robustly. The gains were most pronounced among technology stocks.
These stocks have been at the forefront of the market's gains this year. So far, year-to-date, the Nasdaq is up 36.6 percent as of Monday's close. By contrast, the other major indexes are up by less than half as much. The Dow is up 12.4 percent and the S&P 500 is up 14.4 percent, as of Monday.
Tuesday is the last day of September and the quarter. Trade is expected to remain jittery throughout the session, as portfolio managers adjust their positions, wanting to dump selected losers and buy certain stocks that have been stars during the quarter.
"After last week's selloff, you've got some people ready to get back in," said Robert Long, VP of investments at Melhado, Flynn & Associates. "But then you've got Chicago PMI tomorrow and other reports later in the week, not to mention the end of the quarter, and you may see some caution ahead of that."
Among the factors likely to influence trade in the early going: the consumer confidence report for September, due shortly after the start of trade Tuesday. It's forecast to show a dip to 80.6 from 81.3 last month, according to Reuters' estimates, and will be particularly scrutinized in light of Friday's weaker consumer sentiment reading from the University of Michigan. Also due Tuesday: the Chicago Purchasing Managers Index (PMI), a regional manufacturing survey. That gauge is expected to post a drop to 57 in September, from 58.9 in August, but still above 50, a level that signals expansion in the sector.
In addition, after-the-close Monday, Sun Microsystems (SUNW: down $0.56 to $3.30, Research, Estimates) warned that it will post a bigger-than-expected first quarter loss and that it will take a $1 billion charge, as its business continues to struggle. Shares fell 9 percent in extended-hours trade.
Barring major moves in either direction in the next session, stocks are set to end September with only modest losses, despite the month's reputation as being the worst for Wall Street. Although the first two weeks of September brought significant gains to the market, last week's declines sent stocks back in the red for the month.
According to the Hirsch Organization, which publishes the Stock Trader's Almanac, September has been the worst month for the Dow and S&P 500 for the last 52 years. Much like this September, the month has opened strong seven years in a row, but tends to close weak because of the mutual fund restructuring.
For the quarter, as of Monday's close, the Nasdaq is up 12.4 percent, the Dow is up 4.4 percent and the S&P 500 is up 3.3 percent.
Monday's market
Among the most active market sectors Monday, the semiconductor sector got a boost from data showing global chip sales in August rose 4 percent from July, according to the World Semiconductor Trade Statistics organization.
The Philadelphia Semiconductor index (down 9.73 to 423.19, Charts), or the Soxx, gained 1.9 percent.
Among individual issues, Intel (INTC: down $0.58 to $27.79, Research, Estimates) gained 4 percent, while chip gear makers such as Applied Materials (AMAT: down $0.49 to $18.43, Research, Estimates) added 2.7 percent.
Nokia (NOK: down $0.21 to $15.69, Research, Estimates) shares added 4.2 percent after a Barron's article over the weekend said some changes the company is making in its business could foster a new round of growth.
Software makers Oracle (ORCL: down $0.30 to $11.34, Research, Estimates) and Microsoft (MSFT: down $0.84 to $27.99, Research, Estimates) both gained more than 2 percent, drawn into the technology bounce.
On the downside, video chip maker nVidia (NVDA: up $0.29 to $16.24, Research, Estimates) fell more than 5 percent after Merrill Lynch issued a "sell" rating on the stock, downgrading it from "neutral."
Dow issue 3M (MMM: down $0.77 to $69.50, Research, Estimates) fell 2 percent ahead of its Analyst Day Tuesday. The stock will split 2-for-1 Tuesday morning.
Shares of Alcoa (AA: down $1.05 to $26.31, Research, Estimates) gained 2.5 percent after Canadian aluminum producer Alcan (AL: down $0.97 to $38.08, Research, Estimates) was granted European regulatory approval for its previously-announced $4.6 billion deal to buy French rival Pechiney.
In other news, Canadian insurer Manulife (MFC: down $0.14 to $29.04, Research, Estimates) agreed Sunday to buy life insurance provider John Hancock Financial Services (JHF: up $0.07 to $33.89, Research, Estimates) in a stock deal valued at $10.8 billion. The news sent both stocks lower.
Market breadth was positive. On the NYSE, winners beat losers by more than eleven to five as 1.30 billion shares changed hands. On the Nasdaq, advancers beat decliners by more than three to two, as 1.64 billion shares traded.
Treasury prices tumbled, sending the 10-year note yield up to 4.07 percent from 4 percent late Friday. The dollar fell versus the euro and the yen.
NYMEX light sweet crude oil futures gained 24 cents to settle at $28.40 a barrel. COMEX gold rose $1.40 to settle at $383.20.
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