The stock market had good reason to smile today thanks to a big rally in technology stocks and bigger relief that an auction of Treasury securities easily sold out at yields that traders had expected.
The rally pushed the Nasdaq Composite Index into positive territory for the year for the first time since Jan. 8. The Nasdaq closed up 58 points, or 3.8% to 1,587. That's 10 points above its 2008 close.
The Dow Jones industrials pushed 175 points higher, or 2.3%, to 7,925, and the Standard & Poor's 500 Index was up 19 points, or 2.3%, to 833.
The gains for the major indexes were their third in four sessions and ninth in 13 sessions since they hit their closing lows for the year on March 9.
"We've gone from every piece of news being incrementally bad to not as bad as expectations," said Stephanie Giroux, chief investment strategist at TD Ameritrade. "The fact that collectively we are starting to see things less negative is very significant."
Futures trading suggests U.S. stocks will open slightly lower on Friday. The government will report on personal income and spending. Homebuilder KB Home (KBH, news, msgs) will report first-quarter earnings.
The tech rally pushed semiconductor shares higher, with Intel (INTC, news, msgs) up 5.9% to $15.82. Apple (AAPL, news, msgs) was up 3.2% to $109.87. Research In Motion (RIMM, news, msgs) was up 4.9% $45.04 after Goldman Sachs recommended the stock. Microsoft (MSFT, news, msgs) added 5.3% to $18.83. (Microsoft is the publisher of MSN Money.)
Google (GOOG, news, msgs) was up 2.7% to $353.29, even as it said it was laying off 200 sales staff.
The rally was broad, with decent volume. Nasdaq volume topped 2.4 billion shares; 1.8 billion shares is average. New York Stock Exchange volume topped 1.81 billion shares, also higher than average.
All 10 sectors of the S&P 500 were higher, although some key banks were lower, including Citigroup (C, news, msgs), down 4.8% to $2.81, and Bank of America (BAC, news, msgs), down 0.3% to $7.58. They were the only losers among the 30 Dow stocks.
Wells Fargo (WFC, news, msgs), fell 2.9% to $15.95, and US Bancorp (USB, news, msgs) was up 3.9% to $16.66. (An earlier version of this article had incorrectly reported the price.)
Today's rally was a continuation of a rebound that began on March 10 and has pushed the Dow up 21%, with the S&P 500 up 23% and the Nasdaq up 25%.
The S&P 500 is up 13.3% so far this month and appears headed toward its best monthly gain since October 1974, when it finished up 16.3%.
The Dow and S&P were down about 25.4% on the year on March 9; their losses have been trimmed to 9.7% and 7.8%, respectively. The Nasdaq had been down as much as 19.6% before regaining all of its loss for the year.
Sharing the limelight with the tech rally was the auction of $24 billion of 7-year notes, which were easily sold today with a 2.384% yield that was just about what experts had projected. Moreover, bidders offered 2.5 times the size of the issue, a sign of strong demand. The government has sold some $98 billion in securities this week.
The Dow was up about 70 points before the auction results were announced; the blue chips shot up an additional 80 points almost immediately. The reaction was relief that the auction was successful.
An auction of 5-year notes on Wednesday produced a higher-than-expected yield, and an auction of 40-year British securities didn't attract enough bids to cover the entire issue.
The dollar was higher today, with interest rates generally lower. The yield on the 10-year Treasury note fell to 2.73% from 2.77. The yield on the 30-day Treasury bills fell to 0.007% and was briefly negative.
In addition to the Treasury auction, investors seemed to be comfortable with the regulatory plan proposed by Treasury Secretary Tim Geithner.
And the market found strength in stronger-than-expected earnings from retailer Best Buy (BBY, news, msgs) and food processor ConAgra Foods (CAG, news, msgs).
Best Buy shares were up 12.6% to $37.67 and were ninth among S&P 500 stocks. The earnings report set off a rally among retailing stocks. Wal-Mart Stores (WMT, news, msgs) was up 2.1% to $52.76. Macy's (M, news, msgs) jumped 10.2% to $9.66, and Home Depot (HD, news, msgs) added 3.7% to $24.14.
ConAgra, up 9.2% to $16.99, was 24th among S&P 500 stocks.
Crude oil closed up $1.57, or 3%, to $54.34 a barrel.
Meanwhile, General Motors (GM, news, msgs) was up 14.1% to $3.41 on expectations that the Obama administration's auto industry task force will support extending aid to the automaker and to Chrysler Group. In addition, GM said today that 7,500 hourly workers have accepted buyout offers. Rival Ford Motor (F, news, msgs) was up 6.1% to $2.94.
Transportation stocks were especially strong, with the Dow Jones Transportation Average ($DJT) up 218 points, or 8.2% to 2,866.
| Thur. | Wed. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $54.34 | $52.77 | $1.57 | 21.40% | 21.84% |
| Heating oil (per gallon) | $1.4813 | $1.4647 | $0.0166 | 17.02% | 5.38% |
| Natural gas (per million BTU) | $3.9470 | $4.3290 | -$0.3820 | -5.98% | -29.79% |
| Unleaded gasoline (per gallon) | $1.5311 | $1.4950 | $0.0361 | 19.55% | 51.86% |
Geithner pushes for comprehensive financial rules
Treasury Secretary Geithner told the House Financial Services Committee today that the nation needs stronger regulatory oversight of the financial services industry."We need much stronger standards for openness, transparency and plain, common-sense language throughout the financial system," Geithner said. "To address this will require comprehensive reform. Not modest repairs at the margin, but new rules of the game."
Geithner would extend federal regulation to large hedge funds, major insurers and all companies trading in financial derivatives.
"The system proved too unstable and fragile, subject to significant crises every few years, periodic booms in real-estate markets and in credit, followed by busts and contraction," Geithner said.
His plan also calls for powers to seize and wind down any financial services company that could threaten the overall financial system, including nonbanks like American International Group (AIG, news, msgs). The government has given AIG, the world's biggest insurer, $180 billion in aid to keep it from collapsing.
"We have a moment now where there is broad-based will to change things that people did not want to change in the past," Geithner said Wednesday in a speech in New York. "We want to begin the process now of trying to build consensus while people recognize and are feeling so acutely the damage caused by those basic failures in regulation."
Separately, the House Budget Committee voted 24 to 15 late Wednesday to approve President Barack Obama's budget for the fiscal year that begins Oct. 1. The action sends the plan to the House floor for a vote next week.
Best Buy, ConAgra beat the Street
Best Buy shares jumped after the company's fourth-quarter results topped analysts' expectations.The electronics retailer said profit fell to $570 million, or $1.35 per share, down from $737 million, or $1.71 per share, in the same period a year ago. Excluding items, Best Buy said it would have earned $1.61 per share, which was well above the $1.41-per-share consensus estimate.
Stock Charts (Year)
Best Buy
ConAgra Foods
ConAgra Foods, which makes products under the Healthy Choice and Egg Beaters brands, among others, said fiscal-third-quarter results fell to $193.2 million, or 43 cents per share, from $309.1 million, or 63 cents per share, in the same period a year ago. Excluding items, ConAgra posted earnings of 40 cents per share, 4 cents better than the consensus estimate.
Meanwhile, Dr Pepper Snapple Group (DPS, news, msgs) shares surged 15% to $17.87. It was the steepest advance for the stock since the shares began trading in April 2008. The drinks maker spun off by Cadbury Plc said earnings will be as much as $1.67 a share this year, more than the $1.61 average estimate of analysts surveyed by Bloomberg.
The gain was second among S&P 500 stocks, behind SLM Corp. (SLM, news, msgs), better known as Sallie Mae, the student loan financing company whose shares were up 15.7% to $4.13.
More upbeat economic data
Believe it or not, the economy seems to be starting to stabilize.One bit of positive news this morning: The Commerce Department's final revision for fourth-quarter gross domestic product was better than expected.
The economy contracted at a 6.3% annual pace last quarter, slightly worse than the previous reading of a 6.2% decline, but better than the 6.6% decline economists had forecast.
"The economy is still clearly suffering, but we're seeing some decent signals," John Herrmann, the chief economist at Herrmann Forecasting, told Bloomberg News. The government's policy moves "will head off the downside risk and help the forces of recovery build some momentum."
Fourth-quarter GDP growth was at the slowest pace since 1982. Overall, the economy grew at a rate of 1.1% in 2008.
There have been reasons for optimism in recent days: Durable-goods orders rose 4.3% and new-home sales 4.7% in February, while existing-home sales were up 5.1%.
"This view is maybe a little premature, but there are definitely some brighter signs starting to show themselves, and with the rally in stocks looking like it has yet further to go, you could forgive some for feeling a little more optimistic," Nick Mitchell, a dealer at CMC Markets, told MarketWatch.
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"We still forecast a tepid recovery in 2010 as the contractionary forces become spent . . . and the near-term positive impacts of monetary and fiscal policy take hold," David Shulman, senior economist with the UCLA School of Management, wrote in the school's quarterly GDP forecast.
Jobless claims rise
Initial claims for unemployment insurance rose by 8,000 last week to 652,000, the Labor Department said in its weekly report. Initial claims were up 78% from the same week in 2008.The number of continuing claims rose by 122,000 to a seasonally adjusted 5.56 million in the week ending March 14, a record high. The four-week moving average of continuing claims rose 123,750 to 5.33 million, also a record high.
Most forecasts agree that unemployment will continue to rise through the end of this year.
White House to give more loans to automakers
The White House auto industry task force is prepared to lend General Motors and Chrysler more money, The Wall Street Journal reported today.The two companies have requested $22 billion more, including $9 billion next quarter.
The task force may not disburse new aid immediately, choosing instead to preserve that as leverage to ensure that the necessary restructuring is completed at the companies, the report said.
The federal government has already given $17.4 billion in aid to GM and Chrysler to prevent them from going under; Ford has said it does not need government help -- so far.
Separately, GM is close to agreement with the United Auto Workers union on buyouts for about 10% of the company's work force, which would allow for big cost reductions at the automaker.
Goldman to sell stake in Chinese bank
Goldman Sachs (GS, news, msgs) has come to an agreement with the Chinese government for the sale of its 4.9% stake in Industrial and Commercial Bank of China (IDCBY, news, msgs).Goldman will be able to sell 20% of its stake in the company at the end of April. Goldman Sachs was down 0.9% to $111.99 today.
American Express (AXP, news, msgs), which has a 0.4% stake in ICBC, said it is also considering selling. American Express was up 7.2% to $15.13.
Andrew Rosenbaum contributed to this report.
| Thur. | Wed. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 0.140% | 0.185% | -0.045 | -44.00% | 21.74% |
| 5-year Treasury note yield | 1.783% | 1.805% | -0.022 | -11.73% | 14.96% |
| 10-year Treasury note yield | 2.733% | 2.772% | -0.039 | -10.13% | 21.79% |
| 30-year Treasury bond yield | 3.651% | 3.717% | -0.066 | -1.91% | 35.67% |
| Currencies | |||||
| U.S. Dollar Index | 84.610 | 84.295 | 0.315 | -4.02% | 2.99% |
| British pound in dollars | $1.4451 | $1.4556 | -0.0105 | 0.90% | -1.92% |
| Dollar in British pounds | £0.6920 | £0.6870 | 0.0050 | -0.89% | 1.96% |
| Euro in dollars | $1.3521 | $1.3583 | -0.0062 | 6.63% | -3.49% |
| Dollar in euros | € 0.7396 | € 0.7362 | 0.0034 | -6.21% | 3.61% |
| Dollar in yen | 98.80 | 97.66 | 1.14 | 1.22% | 8.99% |
| Canadian dollar in U.S. dollars | $0.813 | $0.812 | $0.0011 | 3.55% | -0.54% |
| U.S. dollar in Canadian dollars | $1.230 | $1.231 | -$0.0008 | -3.43% | 0.55% |
| Commodities | |||||
| Gold | $942.20 | $938.00 | $4.20 | -0.03% | 6.55% |
| Copper | $1.8550 | $1.8030 | $0.05 | 20.57% | 31.56% |
| Silver | $13.6200 | $13.4370 | $0.18 | 3.89% | 18.96% |
| Corn | $3.9075 | $3.8575 | $0.05 | 11.40% | -3.99% |
| Crude oil (NYMEX) (per barrel) | $54.34 | $52.77 | $1.57 | 21.40% | 21.84% |
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