Dow hits all-time high
Big blue-chip barometer hits intra-day record of 14,111 as Wall Street resumes the recent advance; Citigroup warning, drop in ISM index fuels hope of Fed rate cut.
NEW YORK (CNNMoney.com) -- Stocks surged Monday afternoon, with the Dow touching an all-time high above 14,110 as investors shrugged off a profit warning from Citigroup and instead focused on the possibility of more Fed rate cuts.
The Dow Jones industrial average (Charts) added around 210 points with an hour left in the session, rising as high as 14,111.53 and setting a new all-time intra-day high. The previous intra-day high was 14,021.95 from July 19.
"You're seeing a continuation of the recent momentum," said Chris Johnson, CEO of Johnson Research Group. "There was unfavorable news in the financial arena, but the market is still rallying, which tells you that investors are afraid of getting left behind."
Investors were also perhaps reacting to hopes that any so-called "bad news," whether it be weak bank earnings or a dip in the ISM index, means that the Federal Reserve is more likely to cut interest rates again at its next policy meeting scheduled for the end of the month.
Citigroup stock rose, even after the company warned that its third-quarter earnings could slump 60 percent because of $3 billion in write-downs the company had to take due to subprime-backed securities.
But investors may have taken comfort that Citigroup and UBS' news wasn't even worse, considering the level of fear about the impact of the subprime fallout.
A variety of bank stocks rose, boosting the Amex Securities Broker/Dealer index by 2 percent.
The weak bank sector news was also partly tempered by Nokia's (Charts) bid to purchase navigation-software maker Navteq for $8.1 billion. Typically, big deal announcements support the broader market as they are seen as a sign of corporate confidence.
Pulte Homes (Charts, Fortune 500), Centex (Charts, Fortune 500) and Lennar (Charts, Fortune 500) rallied after Citigroup upgraded them to "buy" from "hold" as part of a broader note on the homebuilding sector.
Market breadth was positive. On the New York Stock Exchange, winners topped losers 3 to 1 on volume of 810 million shares. On the Nasdaq, advancers topped decliners 2 to 1 as 1.19 billion shares changed hands.
In economic news, the Institute for Supply Management said its September manufacturing index fell to 52.0 from 52.9 the previous month. Economists surveyed by Briefing.com thought it would fall to 52.5.
Stocks eased Friday at the end of a strong week and month on Wall Street. It was also the last day of a tumultuous third quarter that saw the major gauges ultimately post gains after the Federal Reserve cut interest rates for the first time in four years.
Oil prices fell Monday. U.S. light crude for November delivery lost $1.61 to $80.05 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery rose $3.20 to $753.20 an ounce.
Treasury prices inched higher, lowering the yield on the 10-year note to 4.57 percent from 4.58 percent late Friday. Bond prices and yields move in opposite directions.
In currency trading, the dollar neared another all-time low versus the euro and inched higher versus the yen.