Stocks get high on Lowe's

Dow climbs 235 points on home improvement retailer's upbeat outlook, a positive housing report and a Bank of America's stock upgrade.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Ben Rooney, CNNMoney.com staff writer

marketwrap.gif

NEW YORK(CNNMoney.com) -- Stocks rallied Monday, with the Dow adding 350 points after positive news about the U.S. housing market, including an upbeat profit forecast from Lowes, as well as an upgrade of Bank of America, encouraged investors to step back into the market after last week's selloff.

The Dow Jones industrial average (INDU) gained 235 points, or nearly 2.8%. The S&P 500 (SPX) index rose 3% to close above 900, bringing the average back into positive territory for the year. The Nasdaq composite (COMP) advanced 3.1%.

Stocks slumped last week after worse-than-expected reports on retail sales, housing and weekly jobless claims put investors on the defensive.

But a big rally in Indian markets helped set Monday's bullish tone early on. The buying gained momentum in afternoon trading with retail and banking shares gaining ground.

"I think we're seeing a bounce after the weakness last week," said Richard Sparks, senior equities analyst at Schaeffer's Investment Research. "For investors who think the market is going to continue higher, now might be a good time to get back in at prices that are a bit lower."

Tuesday brings readings on new home construction and building permits in April. Companies reporting quarterly results include Dow components Home Depot (HD, Fortune 500) and Hewlett-Packard (HPQ, Fortune 500).

Housing: Lowe's (LOW, Fortune 500), the No. 2 home-improvement retailer, projected a higher fiscal second-quarter profit after posting a 22% decline in the first quarter that still managed to top analysts' forecasts. Shares rose 8%.

"The housing issue is front and center in the economic recovery," said Quincy Krosby, chief investment strategist at The Hartford. "Lowe's is a major player in that space and their comments are important."

Two private reports helped bolster confidence in the housing market. The National Association of Home Builders said its index of homebuilder confidence rose for the second month in a row. Separately, the NAHB said home prices are at their most affordable in nearly two decades.

Banking: Shares of financial services companies got a boost after Bank of America (BAC, Fortune 500) was upgraded to "buy" by Goldman Sachs (GS, Fortune 500). Analysts said the bank will be able to raise needed capital thanks to gains in mortgage and capital markets activity. BofA gained 10%.

Financial holding company State Street (STT, Fortune 500) announced a $1.45 billion stock offering and said it would also offer non-guaranteed senior notes. The company said it plans to repay its government bailout funds.

World markets: Indian stocks soared 17% after a parliamentary win by the nation's ruling party raised hopes of more political stability. Trading was halted after the surge.

Peter Cardillo, chief market economist for Avalon Partners, said signs of stabilization in India, an emerging economic powerhouse, are helping support the U.S. market.

"The prospects of more stability in India and the surge in their stock market could be beneficial to us," said Cardillo. "I think it's a stabilizing factor for the market."

Most other Asian markets fell. Stocks in Europe closed nearly 2.5% higher.

Rally or bust: A growing sense of economic optimism has lifted shares since their March 9 multi-year lows that many analysts believe represent a bear market bottom.

But the rally hit a wall last week after weaker-than-expected reports on retail sales, housing and weekly jobless claims that shook the outlook for economic growth and put investors on the defensive.

Market participants are trying to determine if last week's pullback was a temporary dip on the way up, or a sign of more weakness to come.

To that end, Krosby said investors are watching key technical levels on the S&P 500, which closed near the bottom of its recent trading range Friday. She said a close above the 900 level Monday, with a high degree of participation, would set the scene for a push higher.

"This week is very important for both bulls and bears," she said.

Bonds: Treasury prices slumped, raising the yield on the benchmark 10-year note to 3.21% from 3.13% Friday. Treasury prices and yields move in opposite directions.

Other markets: In currency trading, the dollar rose versus the yen, but fell sharply against the euro and British pound.

U.S. light crude oil for June delivery rose $2.69 to settle at $59.03 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $9.60 to settle at $921.70 an ounce.

The national average price of a gallon of unleaded gasoline rose to $2.31, its 20th consecutive increase, according to a daily reading released by the motorist group AAA. The price of gas has increased by about 25 cents a gallon in the last three weeks, according to the Lundberg Survey. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Some Converse copycats cost big bucks A few bargain brands got swept up in Chuck Taylor's net, but others cost a pretty penny. More
Urban infrastructure gets a second life Railroad beds become parks, power plants become aquariums and slaughterhouses are now art centers as an industrial past turns people-centric. More
Boomtown moms From working mothers raising their kids in RVs to stay-at-home moms who spend their days organizing events for the Oil Wives club, meet the moms of North Dakota's oil boom. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.