NEW YORK (CNN/Money) -
Some late-day buying helped the Dow and S&P 500 to rally to their highest closes in 19 months, despite lackluster trade throughout the session amid concerns about the elevation of the U.S. terror threat alert level over the weekend.
The Dow Jones industrial average (up 59.78 to 10338.00, Charts) gained 0.6 percent, while the Standard & Poor's 500 (up 4.28 to 1092.94, Charts) claimed a lesser 0.4 percent gain. The Nasdaq composite (up 4.78 to 1955.80, Charts) managed to pull off a 0.3 percent rise. All three indexes were stuck in a tight trading range throughout most of the day.
"It's kind of a holiday snoozer," said James Park, senior trader at Brean Murray & Co. "All of the big players have locked in their gains for this year. It's just going to be quiet with exaggerated movements because of low volume this week."
News that the government Sunday raised the terrorist threat level to "high" from "elevated," and a warning from Homeland Security Secretary Tom Ridge that possible terrorist strikes in the near future could be more devastating than those of Sept. 11, weighed on the market. (For more on this, go to CNN.com.)
Light trading due to the holiday-shortened week, as well as the absence of economic reports or significant corporate news Monday, made trading volatile. Stock markets will be closed on Thursday in observance of the Christmas holiday, and will close at 1 p.m. ET on Wednesday and Friday.
Investors could turn back to the economy Tuesday, with a few reports due for release.
Before the opening bell, the government reports personal income and spending data for November. Economists expect income to have risen 0.4 percent, holding steady from October's 0.4 percent rise, but forecast that spending jumped 0.7 percent after a flat reading in the prior month.
Economists expect the final reading on economic growth in the third quarter, also due before the open, to come in at 8.2 percent, unchanged from the prior reading.
Scheduled for release just after the start of trading is the University of Michigan's revised reading on consumer sentiment for December, which is expected to rise to 91.0 from an earlier reading of 89.6.
Dow, S&P at new 19-month highs
The Dow, which has been the strongest of the three major indexes this month, ended Monday at its highest level in since May 17, 2002. The S&P also managed to rise to a new 19-month high, reaching its top point since May 24, 2002.
Meanwhile the Nasdaq, which is up 46 percent so far this year, also rose Monday. But the index has encountered some profit taking in recent weeks. Traditionally the markets experience a "Santa Claus" rally in the last two weeks of December and the first two weeks of January on enthusiasm over holiday sales and as investor shore up positions heading into the new year.
"The Nasdaq composite hasn't been able to confirm the recent highs of the Dow Jones Industrials and that's why you're seeing lethargy in the markets today," said Peter Green, market analyst at MKM Partners.
Wal-Mart warning shrugged off
On the corporate front, Wal-Mart drew attention after stating that its December sales would likely come in at the lower end of the projected range. But the somewhat disappointing news had little effect on the retail sector and the broader market. In fact, Wal-Mart (WMT: up $0.72 to $53.07, Research, Estimates) rose 1.4 percent despite the news.
Retailer Sears (S: down $0.45 to $44.39, Research, Estimates) saw its shares slip 1 percent after Bear Stearns lowered its fourth-quarter earnings estimates on the stock following the release of pro forma numbers that reflected the sale of credit, and given the heavy promotions during the holiday season.
Meanwhile, Ford Motor (F: up $1.55 to $16.79, Research, Estimates) rallied 10.2 percent after it raised its 2003 earnings and said it had reached an agreement with its former parts unit, Visteon (VC: up $0.34 to $10.34, Research, Estimates), to assume a greater part of its retirement costs. Rival General Motors (GM: up $2.05 to $52.41, Research, Estimates) also bounced 4.1 percent on the news.
And Pfizer (PFE: up $0.03 to $34.30, Research, Estimates) was little changed after the drugmaker agreed over the weekend to buy Esperion Therapeutics (ESPR: up $11.83 to $34.53, Research, Estimates) for about $1.3 billion, which will add an experimental cholesterol drug to its line of products. Shares of Esperion jumped 52.1 percent.
The increased talk of terrorist threats weighed on airline stocks in morning trading. Among the biggest losers were America West (AWA: down $0.27 to $11.43, Research, Estimates), down 2.3 percent and Air Tran (AAI: down $0.30 to $11.34, Research, Estimates), which fell 2.6 percent.
Market breadth was mixed. On the New York Stock Exchange, where 1.2 billion shares traded, advancers outnumbered decliners five to three. On the Nasdaq, gainers edged past losers on volume of 1.3 billion shares.
Treasury bond prices fell, with the 10-year note down 10/32 of a point in price to yield 4.17 percent, up from 4.13 percent late Friday. Bond prices and yields move in opposite directions.
The dollar hit another record low against the euro and also fell against the Japanese yen.
In commodities markets, NYMEX light sweet crude oil futures tumbled $1.15 to $31.87 a barrel, as the weather in the U.S. Northeast warmed up. COMEX gold gained $1.40 to $411.30 an ounce.
Stocks in Europe closed mostly lower. In Asia stocks managed to end the day higher.
|
