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Wall Street enjoyed a post-Christmas mini rally on Monday as the markets managed to shrug off tumbling airline stocks and close in the green for the sixth day in a row.
Today's Markets
The Dow Jones Industrial Average rose 26.98 points, or 0.26%, to 10547.08, the Standard & Poor's 500 added 1.3 points, or 0.12%, to 1127.78 and the Nasdaq Composite picked up 5.39 points, or 0.24%, to 2291.08. The FOX 50 added 2.14 points, or 0.26%, to 822.73.
The latest rally landed all three major indexes at their highest levels of the year and allowed Wall Street to build on what was its best week in more than a month. However, the gains were limited by airlines like U.S. Airways (LCC), which sold off on fears about how the failed terrorist attack over the weekend might impact travel demand.
Most of the Dow's 30 components closed in the green, led by IBM (IBM) and 3M (MMM).On the down side American Express (AXP) and Alcoa (AA) sank 1.5% a piece.
It's hard to put too much stock into Monday's action as trading volume was once again very light due to the holiday-shortened trading week. The New York Stock Exchange is scheduled to close on Friday for New Year’s Day.
“I think we’re going to limp through the balance of this week but the momentum is clearly positive,” NYSE trader Ted Weisberg of Seaport Securities told FOX Business.
Wall Street managed to overcome a steep selloff in the airline sector and some Al Qaeda jitters. Stocks hit session lows after a branch of Al Qaeda claimed responsibility for the attempt to blow up a Detroit-bound plane on Christmas Day.
American Airlines parent AMR Corp. (AMR), JetBlue (JBLU) and Continental (CAL) all took a big hit as the markets bet the failed terrorist attack will hurt an industry still recovering from the recession. The foiled attack came eight years after the Sept. 11 attacks, which caused a dramatic drop-off in air travel and the bankruptcy of a number of airlines.
The financial sector also lost ground on Monday as banks like PNC Financial (PNC) and Wells Fargo (WFC) slumped roughly 1% a piece.
Wall Street's mini rally began overseas as China’s Shanghai Composite struck a 16-month high after Chinese Premier Wen Jiabao told the state-run Xinhau news agency the government should continue economic stimulus measures and not end any programs prematurely.
The comments also helped lift commodities, boosting copper by more than 1% to pre-Lehman Brothers levels. Gold rose $3.10 a troy ounce, or 0.28%, to $1107.20. Rallying for the fourth day in a row, crude climbed 72 cents a barrel, or 0.92%, to $78.77 -- its highest settle since Nov. 18.
Retailers such as Macy’s (M) and Amazon.com (AMZN) were on the rise Monday as SpendingPulse said 2009 holiday sales rose 3.6%, excluding gasoline and auto sales. The modest up-tick in spending was boosted by online transactions and an extra day of shopping after 2008’s very weak performance.
Wall Street will keep an eye on the bond market this week as the U.S. Treasury plans a record-tying $118 billion worth of auctions. The markets will be looking for any hints of weak demand that could foreshadow higher interest rates, which would likely hurt the economic recovery. Despite those worries, stocks had little reaction to a weak auction of $44 billion worth of two-year notes on Monday.
Corporate Movers
Fannie Mae (FNM) and Freddie Mac (FRE) saw their shares soar more than 20% a piece after the U.S. pledged unlimited support for the mortgage giants and abandoned its demand for the companies to trim their vast mortgage portfolios. Previously each of the government-sponsored enterprises had a $200 billion credit line, of which they had tapped a combined $111 billion.
Vical (VICL) announced a positive late-stage review of its experimental skin cancer treatment, sending the drug maker’s stock soaring 21%. The company said an independent trial of Vical’s Allovectin-7 treatment completed its third scheduled safety analysis and recommended that the trial continue.
Cal-Maine Foods (CALM) disclosed a 41% drop in its fiscal second-quarter profit but the food maker’s EPS of 67 cents beat the Street by a penny. However, the owner of Eggland’s Best and Farmhouse eggs said its revenue fell 4% to $229.2 million, narrowly missing estimates.
Global Markets
While London's FTSE 100 was closed for a holiday,France's CAC 40 gained 0.88% to 3947 and Germany's DAX rose 0.76% to 6002.92 -- its highest close since Sept. 26, 2008.
In Asia, Tokyo's Nikkei 225 rose 1.33% to 10634.23, Hong Kong's Hang Seng fell 0.17% to 21480.22 and China's Shanghai Composite jumped 1.5% to 3188.78.
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