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Staking out an advance
Stocks gain modestly Monday on strength in tech, financial; Tuesday primed for mixed open pre-Cisco
May 9, 2005: 5:43 PM EDT
By Alexandra Twin, CNN/Money Staff Writer

NEW YORK (CNN/Money) - Stocks climbed Monday, boosted by strength in financial and select technology shares. However, gains were limited by news due later in the week, including earnings from Cisco Systems after the close Tuesday.

Nasdaq and S&P futures were pointing to a mixed open Tuesday, when fair value is taken into account.

The Standard & Poor's 500 (up 7.49 to 1,178.84, Charts) index and the Nasdaq composite (up 12.32 to 1,979.67, Charts) both added around 0.6 percent.

The Dow Jones industrial average (up 38.94 to 10,384.34, Charts) rose around 0.4 percent.

Treasury prices edged lower, lifting yields. The dollar was mixed versus other major currencies.

U.S. light crude oil for June delivery jumped $1.09 to settle at $52.05 a barrel on the New York Mercantile Exchange, spiking late in the session after trading in a narrow band earlier in the day.

That briefly had an impact on investors, but the market mostly managed to shake it off by the close.

"The volume is light with a lot of people on the sidelines, particularly after last week where you had some heavy economic activity," said Todd Salamone, director of trading at Schaeffer's Investment Research.

"You've got some key earnings reports such as Cisco tomorrow and Dell Thursday that could pull traders off the sidelines again, as well as retail sales later in the week," he added. "But for now it's pretty quiet."

After the close Tuesday, Cisco is expected to post earnings of 22 cents per share, up from 19 cents per share a year earlier. Should the networking leader say something particularly bullish, that could help support tech shares in over the next few sessions.

There are no market-moving earnings or any economic news on tap for Tuesday morning.

Market breadth was positive and volume was light. On the New York Stock Exchange, winners topped losers by around two to one as 1.36 billion shares changed hands. On the Nasdaq, advancers beat decliners three to two as 1.47 billion shares traded.

What moved?

While most companies revealed April retail sales results last week, a few trickled in Monday, including McDonald's (up $0.74 to $30.12, Research).

The Dow component reported both U.S. and global same-store sales in April that topped estimates, sending its shares 2.5 percent higher. Same-store sales refers to sales at stores open a year or more.

General Motors (up $0.57 to $31.33, Research) gained 1.8 percent after billionaire investor Kirk Kerkorian set in motion an offer to buy up to 28 million shares of General Motors at $31 per share. The investor said last week that he was seeking to increase his GM stake.

Among other movers, Lucent Technologies (up $0.34 to $2.92, Research) rose more than 13 percent after a bullish Barron's article over the weekend.

That gave a lift to others in the networking sector, sending the Amex Networking (Research) index up 2.3 percent.

Financial stocks gained, as well, on a potential deal amongst online brokerages.

E*Trade Financial (up $0.69 to $12.62, Research) has formally shown its interest in buying rival Ameritrade (up $2.11 to $13.42, Research) via a letter, according to the Wall Street Journal. The deal could be worth $12 billion to $14 billion, analysts speculate.

Shares of Ameritrade rallied 18.7 percent in very active Nasdaq trade. E*Trade rose nearly 6 percent in active New York Stock Exchange trade.

The Amex Securities Broker/Dealer (up $4.53 to $144.77, Research) index gained 3.2 percent.

Additionally, Duke Energy (down $0.54 to $28.82, Research) has agreed to buy Cinergy (up $1.94 to $42.32, Research) for around $9 billion in stock. Duke shares lost around 1.8 percent and Cinergy gained close to 5 percent.

Economic news on tap

A bigger-than-expected April payrolls report had little impact on stocks Friday, but marked the end of a strong week for the markets. After such an advance, investors may have been hesitant about reports due this week, including reads on retail sales and consumer sentiment.

"It's pretty quiet today," said Tim Heekin, head of stock trading at Thomas Weisel Partners. "We've got an FOMC meeting behind us, most of the earnings behind us, an employment number behind us. The next piece of economic news everyone will look at will be retail sales on Thursday."

A report on wholesale inventories released early Monday showed a smaller-than-expected rise in March. Inventories rose 0.4 percent versus forecasts for a rise of 0.7 percent. Inventories rose 0.6 percent last month. However, it seemed to have little impact on stocks.

Treasury prices slipped, raising the 10-year note yield to 4.27 percent from 4.26 percent late Friday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar fell versus the euro and strengthened versus the yen.

COMEX gold ended unchanged at $426.90 an ounce.  Top of page


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