The Dow rose more than 200 points Monday afternoon, rebounding sharply from a rare ugly week, as Wall Street benefits from a rally in banking stocks and positive comments from Lowe's.
Today's Markets
As of 2:50 p.m. EDT, the Dow Jones Industrial Average jumped 205.33 points, or 2.48%, to 8473.21, the S&P 500 rose 22.05 points, or 2.50%, to 904.89 and the Nasdaq Composite picked up 44.14 points, or 2.63%, to 1724.28. The consumer-friendly FOX 50 added 16.29 points, or 2.50%, to 668.31.
The markets have been in the green throughout the session, recently hitting session highs. The positive start to the week comes as traders try to determine whether last week’s losses, Wall Street’s worst performance in ten weeks, was just a blip or the start of another leg down.
Haunted by a surprise drop in retail sales, the Dow tumbled 300 points last week, erasing a slice of its 2,000 point rally from early March. The Nasdaq Composite tumbled 3.4%, ending its nine-week winning streak.
“I think in certain [sectors] it was a sucker’s rally,” Peter Boockvar, equity strategist at Miller Tabak, told FOX Business. He said it was just a bear-market rally for the financial, retail and housing sectors as “the U.S. still has years to go in deleveraging.”
Almost all 30 components of the Dow were in positive territory during recent action, led by Bank of America (BAC), General Motors (GM) and Home Depot (HD). Defensive plays like McDonald's (MCD) and Johnson & Johnson (JNJ) struggled to escape negative territory.
The Nasdaq Composite was also sharply higher as traders snapped up tech stocks like Cisco (CSCO) and Apple (APPL).
Without any major economic reports released, much of the focus Monday was on Lowe’s (LOW), which beat the Street and announced better-than-expected earnings guidance. The company’s earnings of 32 cents per share easily topped estimates as its revenue slid 1.5% from a year ago.
Lowe’s raised its full-year earnings guidance, saying it has seen consumer confidence improve and “signs of a bottom in certain markets.” The commentary also boosted shares of Home Depot, which is set to report results Tuesday.
Meanwhile, the financial sector rallied more than 5% on a slew of positive analyst notes. Shares of Bank of America (BAC) jumped after Goldman Sachs added the company to its conviction buy list, pointing to its ability to earn its way out of the cycle.
At the same time, analysts at Citigroup upped their price target and earnings outlook on Goldman Sachs (GS), citing the bank’s strong capital and liquidity position and falling credit spreads.
“As the financials go, I suspect so will go the market,” NYSE trader Ted Weisberg of Seaport Securities told FOX Business. “It will be real interesting to see if the financials can regain their momentum.”
Boosted by a positive analyst note on Lennar (LEN) and new economic data, the home building sector was sharply higher Monday afternoon. For the second month in a row, the National Association of Home Builders confidence survey climbed higher, reflecting new optimism. The index climbed from 14 in April to 16 this month, its highest level since September.
Energy stocks like ConocoPhillips (COP) were also on the rise as crude oil rebounded sharply from its first weekly loss in the past three weeks. Crude closed up $2.68 per barrel to $59.02.
Corporate Movers
Wal-Mart (WMT) is revamping the electronic departments at its stores as the retailer looks to steal former Circuit City customers away from electronics leader Best Buy (BBY), The Wall Street Journal reported. Roomier and more interactive electronics displays that showcase the latest phones and computers are reportedly arriving Monday.
State Street (STT) said it plans to sell $1.5 billion in stock and notes to offset a $3.7 billion charge on asset-backed commercial paper conduits. The Boston-based bank also said it plans to sell non-FDIC backed notes in an effort to pay back its $2 billion TARP infusion.
General Motors (GM) received SEC approval to exchange $27 billion in unsecured bonds into common stock as the auto maker continues its efforts to avoid a bankruptcy filing, Dow Jones Newswires reported.
Lennar (LEN) saw its shares soar after Citigroup upgraded the home builder to “buy” from “hold,” citing valuation and a recent debt issuance, Dow Jones Newswires reported.
Pacific Ethanol (PEIX) said its units that own four ethanol production facilities have filed for Chapter 11 bankruptcy protection. Existing lenders have agreed to provide $20 million in DIP financing.
Boeing (BA) was upgraded by Goldman Sachs to “neutral” from “sell.” The firm also upgraded Rockwell Collins (COL) but cut Northrop Grumman (NOC), L-3 Communications (LLL) and Raytheon (RTN).
Global Markets
European stocks were up across the board asLondon's FTSE 100 rose 2.26% to 4446.45, France's CAC 40 rallied 2.41% to 3245.39 and Germany's DAX gained 2.42% to 4851.96.
In Asia, Japan's Nikkei 225 dropped 2.44% to 9038.69 while Hong Kong's Hang Seng gained 1.38% to 17022.91. China's Shanghai Composite rose 0.28% to 2652.78.
Also, India's benchmark Bombay Sensex jumped more than 17% overnight -- its largest one-day jump in 17 years -- after Prime Minister Manmohan Singh and his Congress Party won a solid majority in nationwide elections.
