Deals drive the DowBuyouts of Sallie Mae, DoubleClick fuel blue-chip rally; strong retail sales, falling oil, Greenspan also provide a boost.NEW YORK (CNNMoney.com) -- The Dow jumped about 100 points Monday as a solid start to the earnings reporting period and deals for Sallie Mae and DoubleClick fueled a powerful rally on Wall Street. The Dow Jones industrial average (up 114.42 to 12,726.55, Charts) rose about 0.8 percent while the broader S&P 500 (up 15.00 to 1,467.85, Charts) gained 0.9 percent about 2-1/2 hours into the session.
The tech-heavy Nasdaq composite (up 24.97 to 2,516.91, Charts) index climbed about 0.9 percent. Citigroup, the nation's largest bank, reported lower profits that still beat forecasts, sparking strength in financial stocks. In economic news, retail sales rose a solid 0.7 percent in March, fed by strength in gasoline and building supplies, after rising 0.5 percent in February, which was revised higher by the Census Bureau. Economists surveyed by Briefing.com had forecast a 0.4 percent rise in March. "Clearly the earnings news has given a boost to stocks," said Art Hogan, chief market analyst at Jeffries & Co. "There's been more good than bad in earnings so far. One thing we'll find out in earnings season is that we probably set the bar far too low." "Retail sales for March were higher, which reminds us that we can't assume the consumer is dead when we haven't seen any sustained evidence for it," he added. "What we always forget is that consumers tend to spend not what their homes are worth, but what they're making. The levels of employment and wage growth are key, and those have been strong." Elsewhere, in a speech in Tokyo that he delivered via satellite, former Fed chairman Alan Greenspan was quoted as saying the world economy would provide a cushion to a possible slowdown in the United States, as he downplayed the risk to the economy from problems in subprime mortgages. A number of mergers helped push the market higher. Search engine leader Google (Charts) announced late Friday it agreed to buy closely held DoubleClick, an online advertising firm, for $3.1 billion. Google also agreed to sell ads on stations owned by Clear Channel Communications (Charts) starting in June. Shares of Google rose 1.3 percent Monday. Student loan lender Sallie Mae (Charts) agreed to be purchased for $25 billion by a group including private equity firms as well as JP Morgan Chase (Charts) and Bank of America (Charts), the company announced early Monday, sending its stock soaring 18 percent. Quest (Charts) agreed to buy diagnostic testing equipment company Ameripath for $1.23 billion in cash, with the intention of growing Quest's cancer-detection unit. Quest stock sank 5 percent. In earnings news, Citigroup, the largest U.S. bank, said its first-quarter profit fell, hurt by a restructuring charge largely for the elimination of 17,000 jobs. But excluding an $871 million after-tax restructuring charge, the company posted a profit of $1.18 a share, which beat the average Wall Street forecast of $1.10, as compiled by Reuters Estimates. Citigroup stock jumped 3.2 percent on the news, giving other financial services firms a boost. JPMorgan Chase (Charts) shares climbed 1.9 percent and American Express (Charts) added 2.3 percent. Eli Lilly reported that profits fell 39 percent in the first quarter as special charges offset better sales of the company's medicines, but strong revenue drove the stock up 2 percent. Fourth-largest U.S. bank Wachovia (Charts) said its first-quarter profit rose 33 percent, helped by commercial lending growth and acquisitions, sending shares up over 2 percent. World's largest toy maker Mattel (Charts) posted a small first-quarter profit when analysts had expected a loss, as the company took charges due to audit settlements over foreign taxes, sending shares up 1.1 percent. Falling oil prices also helped. U.S. light crude oil for May turned lower, falling 58 cents to $63.05 a barrel on the New York Mercantile Exchange. In other economic news, business inventories rose 0.3 percent in February, in line with expectations. But excluding automobiles, they advanced by 0.8 percent, the largest increase in 11 months. New York state manufacturing activity rose slightly to 3.80 in April after hitting a nearly two-year low the prior month. Market breadth was positive. On the New York Stock Exchange, winners beat losers by a margin of 3 to 1 on volume of 553 million shares. On the Nasdaq, advancers topped decliners by more than 5 to 2 on volume of 670 million shares. Treasury prices rose, taking the yield on the 10-year note to 4.75 percent from 4.76 percent late Friday. Bond prices and yields move in opposite directions. Gold for June delivery rose $1 to 690.90. In currency trading, the dollar fell against the euro and rose against the yen. |
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