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After another roller coaster day full of rallies and selloffs, the markets closed in positive territory on Monday, bouncing back from their worst day in six months thanks to a trifecta of upbeat economic reports.
Today's Markets
The Dow Jones Industrial Average rose 76.71 points, or 0.79%, to 9789.44, the S&P 500 added 6.69 points, or 0.65%, to 1042.88 and the Nasdaq Composite picked up 4.09 points, or 0.20%, to 2049.20.The consumer-friendly FOX 50 gained 3.79 points, or 0.50%, to 768.07.
Stocks initially soared Monday morning after new reports showed pending home sales unexpectedly soared in September and the manufacturing sector in October grew at the fastest pace in more than three years. But the markets inexplicably lost momentum during the early afternoon, wiping out a 146-point gain on the Dow and sending the Nasdaq Composite sharply lower before they both recovered
“I’m still believing the trend is up. But I think this volatility is going to keep us on our toes,” NYSE trader Doreen Mogavero told FOX Business.
The choppy session underscores the volatility that has returned to the markets in recent weeks after months of a relatively smooth recovery. Prior to Monday, the Dow had closed with a triple-digit move in one direction or the other in six of seven sessions.
“There is a sentiment out there that we are in for a bit of a rough ride,” said Frank Davis, director of sales and trading at LEK Securities.
By the end of the day, the Dow closed solidly higher, led by financial giants American Express (AXP) and JPMorgan Chase (JPM). Just a handful of blue-chip stocks closed in the red, including telecoms Verizon (VZ) and AT&T (T).
The Nasdaq Composite lagged behind the broader markets as BlackBerry maker Research in Motion (RIMM) fell nearly 6% on an analyst downgrade. Other tech stocks like Yahoo! (YHOO) and Google (GOOG) were also weak.
Monday marks something of a rebound from Friday when a stronger dollar and tumbling banks sent the Dow plunging 250 points, its worst day since late April. This week could be key for stocks as analysts are watching to see whether or not last week’s big losses entice bargain hunters or inspire more selling. The markets are likely to be moved later in the week by the Federal Reserve's policy statement and the government's jobs report.
A trio of economic reports released Monday triggered the early gains and suggestedthe economy continued to rebound in recent weeks.
The National Association of Realtors said pending home sales jumped 6.1% in September, marking the eight consecutive month of gains. Analysts had expected sales to fall 0.1%. Pending home sale activity is now 21.2% higher than it was a year ago, the NAR said, making it the largest annual increase in pending home sales on record
At the same time, the Institute for Supply Management said its manufacturing index climbed in October to a 55.7 reading, indicating another month of expansion and the highest level since April 2006. Economists had forecasted a weaker reading of 53.3, compared to September's 52.6.
Thanks to a sinking U.S. dollar and the upbeat economic news, commodities rallied on Monday. Crude jumped $1.13a barrel, or 1.47%, to $78.13. Gold rose $13.70 an ounce, or 1.32%, to $1053.40.
Wall Street mostly shrugged off the bankruptcy of commercial lender CIT Group (CIT), which had been rumored to be considering a filing for weeks. The bank, which becomes the fifth-largest bankruptcy in U.S. history, is hoping for a speedy trip through bankruptcy court and to emerge with $10 billion less in debt.
Corporate Movers
Ford (F), the only U.S. auto maker to not take government aid, said it earned 26 cents a share on an adjusted basis. Analyst had projected a loss of 12 cents. Ford also raised its outlook for 2011, forecasting a “solid profit.” The auto maker’s stock jumped nearly 9% on the better-than-expected results.
Bank of New York Mellon (BNY) CEO Robert Kelly passed on Bank of America’s (BAC) overtures to replace Ken Lewis when he steps down as CEO at the end of the year, The Wall Street Journal reported. BofA directors have faced obstacles in looking for an external candidate as some potential CEOs fall short of the board’s hopes or aren’t interested in the job, the Journal reported. BofA CFO Gregory Curl and small-business banking chief Brian Moynihan are said to be the leading internal candidates.
Humana’s (HUM) net income jumped by a better-than-expected 65% in the third quarter but the health insurer forecasted a drop-off in 2010 profits. Humana said its revenue climbed 8% to $7.72 billion during the third quarter, missing the Street’s view of $7.81 billion. The company sees a 2010 profit of $5.05 to $5.25 a share, compared to consensus estimates for EPS of $5.36.
Loews (L) swung to a better-than-expected profit of $1.08 a share last quarter. The conglomerate, which is run by the Tisch family, said its revenue jumped 26% to $3.74 billion
CNA Financial (CNA) turned a profit in the third quarter, earning $263 million, or 86 cents a share. A year ago the Chicago-based company lost $331 million, or $1.23 a share.
Human Genome Sciences (HGSI) said its lupus drug performed well in a second study, boosting the chances of the first approved lupus drug in 50 years and sending the company’s stock surging 30% to new 52-week highs. The drug, benlysta, which is being co-developed with the U.K.’s GlaxoSmithKline (GSK), met its primary goal in the second of two Phase 3 trials.
Data Dump
The Commerce Department said construction spending soared 0.8% in September amid the economic recovery, surprising economists who had forecasted 0.1% decline.
Global Markets
European markets closed higher as London's FTSE 100 rose 1.19% to 5104.50, Paris' CAC 40 gained 0.88% to 3639.46 and Germany's DAX advanced 0.29% to 5430.82.
In Asia, Tokyo's Nikkei 225 slipped 2.31% to 9802.95 and Hong Kong's Hang Seng fell 0.61% to 21620.19 but China's Shanghai Composite jumped 2.7% to 3076.65.
Hurt by Data, Stocks End in StalemateFirst Horizon loss narrows
