It may have been April Fools' Day, but today's rally was no joke. Stocks were buffeted repeatedly by bad news and started the day down sharply.
But slightly better-than-expected news on housing and manufacturing, not to mention March auto sales that were bad but not outrageously so, gave bulls a reason to buy.
So, the Dow Jones industrials ($INDU) finished the day with a 153-point gain, or 2%, to 7,762. The Standard & Poor's 500 Index ($INX) was up 13 points, or 1.7%, to 811, and the Nasdaq Composite Index ($COMPX) was up 23 points, or 1.5%, to 1,552.
The rally came after a strong March that saw the major averages finish with their best performances in more than six years. The S&P 500 closed above 800 today for the first time since Friday, and it also finished 2.7% above its 50-day moving average. Investors see the index's relationship to the moving average as a gauge of market confidence.
Since the market's closing low on March 9, the Dow has risen 18.6%, the S&P 500 19.9% and the Nasdaq 22.3%. The Dow has reclaimed nearly all of its 254-point loss on Monday.
The market's gains today were remarkable because the Dow had dropped as much as 125 points soon after the open.
Much of the rally may have been short-covering in advance of an important regulatory event on Thursday. The Financial Accounting Standards Board, which sets U.S. accounting standards, is expected to relax its so-called mark-to-market rule.
The rule has required companies to write down assets immediately when prices tumble. Banks have been begging for some flexibility, arguing that the rule didn't anticipate how the collapse in credit markets affected the values of illiquid assets like mortgage securities.
In addition, investors are waiting to see if the G-20 economic summit in London on Thursday produces any consensus on regulatory reform for financial institutions.
Friday's payrolls and unemployment report may have a huge effect on markets.
Futures trading suggests that stocks may open slightly higher.
Financial stocks were among the market leaders, with American Express (AXP, news, msgs), Citigroup (C, news, msgs) and JPMorgan Chase (JPM, news, msgs) leading the 30 Dow stocks.
American Express was up 7.4% to $14.44. Citigroup was up 5.9% to $2.68, and JPMorgan Chase added 5.9% to $28.14. Stocks in the financial sector had been down as much as 51% on March 6; that loss has been halved since then as the sector has risen 49.4%.
Crude oil fell $1.27 to $48.39 a barrel in New York after the Energy Department reported larger-than-expected supplies of gasoline.
The day's relatively upbeat news trumped all the chatter about possible bankruptcy filings for General Motors and Chrysler Group. In addition, biotech shares were lower after an earnings warning from Celgene (CELG, news, msgs) that caused at least four downgrades of the shares and also slammed health care stocks overall. Celgene was down 13.4% to $38.47.
Twenty-eight of the 30 Dow stocks were higher; the losers were General Motors (GM, news, msgs), down 0.5% to $1.93 and Boeing (BA, news, msgs), down 0.4% to $35.44. In addition, 394 S&P 500 stocks were up, along with 72 stocks in the Nasdaq-100 Index ($NDX.X). The index, which tracks the largest Nasdaq stocks. The index was up 16 points, or 1.3%, to 1,253.
Techs rise ahead of Research In motion earnings
Tech stocks, which have led the market this year, were strong again today, led by Apple (AAPL, news, msgs), up 3.4% to $108.69; Microsoft (MSFT, news, msgs), up 5.1% to $19.31, and Qualcomm (QCOM, news, msgs), up 2% to $39.68.Research In Motion (RIMM, news, msgs), up 5.8% to $45.62, opened its online applications store. The store is a bid for the company's BlackBerry phones to try to wrest market share in the consumer wireless phone market from Apple's iPhone.
BlackBerry App World, which initially will offer 1,000 games, music and other applications for customers to download, is the latest part of RIM's strategy to broaden its smart phones’ appeal beyond business users, who account for more than half of its customers.
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Research In Motion reports fourth-quarter earnings after Thursday's close. The company is expected to earn 84 cents a share on revenue of $3.4 billion, up from 72 cents a share and revenue of $1.88 billion a year ago. The company had said in February that earnings would come in at the low end of a range of 83 cents to 91 cents a share.
The technology sector of the S&P 500 is up 6.3%, tops among the 10 S&P 500 sectors. The tech sector is up 23.5% since March 9.
Apple is up 39% and IBM (IBM, news, msgs) is up 19% since both bottomed on Jan. 20. Microsoft's close was its first above $19 since Feb. 13; the stock is up 27.5% since its March 9 bottom. (Microsoft is the publisher of MSN Money.)
Bulls beat back bad news
The big catalyst for stocks came from the National Association of Realtors, which said pending home sales rose 2.1% to a seasonally adjusted 82.1 in February from January's record low of 80.4. Still, the index was down 1.4% from a year ago.Economists had expected pending sales to remain unchanged. "Pending home sales have a way to go for there to be a meaningful increase, but recent increases in shopping activity are hopeful indicators that we'll see additional sales gains," Lawrence Yun, NAR's chief economist, said in a statement.
The NAR report, considered to be a leading indicator, is based on the number of contracts signed for sales for existing homes.
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Pending sales jumped 14.5% in the Midwest, 10.6% in the Northeast and 4.4% in the South, while sales in the West fell 13.5%.
"The sharp decline in prices is helping to improve affordability," Joseph Brusuelas, a director at Moody's Economy.com, told Bloomberg News. "There are small signs that the housing market is moving toward stability."
Home-building stocks were generally higher on the report. D.R. Horton (DHI, news, msgs) was up 4.4% to $10.13. MDC Holdings (MDC, news, msgs) was up 2.6% to $31.96.
| Wed. | Tues. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $48.39 | $49.66 | -$1.27 | -2.56% | 8.50% |
| Heating oil (per gallon) | $1.3458 | $1.3679 | -$0.0221 | -1.62% | -4.26% |
| Natural gas (per million BTU) | $3.6950 | $3.7760 | -$0.0810 | -2.15% | -34.28% |
| Unleaded gasoline (per gallon) | $1.3717 | $1.4213 | -$0.0496 | -3.49% | 36.05% |
Auto sales aren't quite so bad
Nobody was expecting much from the automakers, but March sales were not as bad as anyone expected.Overall, analysts were expecting auto sales to drop about 42% from a year ago, putting the U.S. market at a seasonally-adjusted rate of just under 9 million units. Instead, March sales came in at an annual rate of 9.86 million units, according to Autodata Corp. That's still dismal, but a 34.6% decline is better than 40% or more.
GM sales were down 44.7% to 156,380 units. Chrysler Group managed to sell 100,101 units, down 39.5%.
Ford Motor (F, news, msgs) sales were off 41% to 125,107 units.
Toyota Motor (TM, news, msgs) sales were down 39%, and Honda Motor (HMC, news, msgs) sales dropped 36.3%.
"I think we are starting to see a bottom and there are some indicators that things are improving," Erich Merkle, an independent automotive analyst in Grand Rapids, Mich., told Bloomberg "All bets are off if we have some kind of a bankruptcy with GM and Chrysler."
Ford was up 4.2% to $2.74. GM was down 0.5% to $1.93. In New York trading, Toyota added 7.3% to $67.90, and Honda rose 9.3% to $25.90.
Nearly all manufacturers saw declines in autos and light trucks. But Mercedes' Smart Car brand saw a 0.7% gain to 1,746 units.
More important, Korea's Hyundai, which has been aggressively promoting its offer to take cars back if buyers lose their jobs, saw its auto sales rise 3.8% to 31,649 units. Overall sales fell 4.9% because of a 26% decline in truck sales.
GM and Ford have launched similar marketing campaigns this week.
| March 2009 | March 2008 | Chg. | |
|---|---|---|---|
General Motors | 156,380 | 282,732 | -44.69% |
Ford Motor | 125,107 | 213,074 | -41.28% |
Chrysler | 101,001 | 166,836 | -39.46% |
Toyota | 132,802 | 217,730 | -39.01% |
Honda | 88,379 | 138,734 | -36.30% |
Nissan | 66,634 | 106,921 | -37.68% |
Mercedes Benz | 15,602 | 20,808 | -25.02% |
Subaru | 16,249 | 16,685 | -2.61% |
Hyundai | 40,721 | 42,796 | -4.85% |
Manufacturing shows improvement
New data on the manufacturing sector continued to show weakness in the sector even while offering a glimmer of hope.The Institute of Supply Management's manufacturing index came in today at a reading of 36.3 for March -- up slightly from the reading of 35.8 in February, although below 50, which indicates continued contraction. Readings below 40 indicate a broader economic recession.
The index is compiled from data supplied by 300 purchasing and supply executives across the country.
The ISM's new-orders index jumped to 41.2 from 33.1 -- the first time that index has been above 40 in seven months.
"If, as I expect, the ISM increases in the several months ahead, investor sentiment will likely improve because investors recognize the strong correlation that exists between the ISM index and a variety of economic data, such as employment and the gross domestic product," Tony Crescenzi, chief bond strategist at Miller, Tabak, wrote in a note to clients.
A report on construction spending showed some improvement, as well. Construction spending fell 0.9% in February, less than the 1.9% drop economists had expected.
ADP: 742,000 jobs lost in March
Stocks started the day down on news that the private sector had shed 742,000 jobs in March, according to ADP Employer Services. That was more than economists had expected and followed a revised loss of 706,000 jobs in February. The ADP index does not include government jobs.There were big losses in the service sector and the goods-producing sector, with 415,000 and 327,000 jobs lost, respectively. Manufacturing, which is part of the goods-producing sector, accounted for 206,000 jobs lost.
Economists expect the Labor Department's March jobs report, due Friday, to show a loss of 673,000 jobs.
"I'm expecting to see several more months of very weak numbers," said Joe Prakken, chairman of Macroeconomic Advisers, which developed and maintains the ADP report. "It's going to be a while before the jobs market picks back up."
Another employment-related report from outplacement firm Challenger, Gray & Christmas was a little bit better.
Planned job cuts announced by U.S. employers fell for the second month in a row, the Challenger report said. Planned job cuts fell 19.3% in March to 150,411 from 186,350 in February. It was the first two-month decline since February and March of 2007, and the March figure was the lowest since October.
Thornburg to file for bankruptcy
Troubled mortgage lender Thornburg Mortgage (THMR, news, msgs) said today that it will file for Chapter 11 bankruptcy protection.The company will sell or liquidate its remaining assets and then discontinue operations, it said in a statement.
Thornburg, which specialized in jumbo mortgages, fell victim to the mortgage market and housing meltdown over the past year. The stock closed down 66% to 2 cents today. It had traded at $14.50 per share and a year ago. In 2004, the stock was trading above $300.
More from MSN Money
Facebook CFO leaves
Facebook Chief Financial Officer Gideon Yu is leaving the social networking Web site, the company said late Tuesday.Yu's departure could mean that Facebook is strategizing to go public. "We've gotten quite a bit larger," Facebook spokesman Larry Yu said. "What we're looking to hire is someone with experience leading a finance organization at a public company."
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Employees and investors have put about $455 million into the company, with hopes that the company will plan a stock offering, The Wall Street Journal reported.
Gideon Yu had previously been CFO at Google's (GOOG, news, msgs) YouTube.
Facebook, which was founded in 2005 and now claims nearly 200 million users, is expecting revenue growth of at least 70% this year from 2008.
Andrew Rosenbaum contributed to this report.
| Wed. | Tues. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 0.210% | 0.200% | 0.010 | 5.00% | 82.61% |
| 5-year Treasury note yield | 1.652% | 1.675% | -0.023 | -1.37% | 6.51% |
| 10-year Treasury note yield | 2.658% | 2.685% | -0.027 | -1.01% | 18.45% |
| 30-year Treasury bond yield | 3.494% | 3.561% | -0.067 | -1.88% | 29.84% |
| Currencies | |||||
| U.S. Dollar Index | 85.960 | 85.895 | 0.065 | 0.08% | 4.64% |
| British pound in dollars | $1.4382 | $1.4329 | 0.0054 | 0.37% | -2.39% |
| Dollar in British pounds | £0.6953 | £0.6979 | -0.0026 | -0.37% | 2.45% |
| Euro in dollars | $1.3235 | $1.3252 | -0.0018 | -0.13% | -5.53% |
| Dollar in euros | € 0.7556 | € 0.7546 | 0.0010 | 0.13% | 5.86% |
| Dollar in yen | 98.80 | 98.88 | -0.08 | -0.08% | 8.99% |
| Canadian dollar in U.S. dollars | $0.789 | $0.792 | -$0.0026 | -0.33% | -3.47% |
| U.S. dollar in Canadian dollars | $1.267 | $1.263 | $0.0039 | 0.31% | 3.53% |
| Commodities | |||||
| Gold | $927.70 | $925.00 | $2.70 | 0.29% | 4.91% |
| Copper | $1.8490 | $1.8445 | $0.00 | 0.24% | 31.13% |
| Silver | $12.9750 | $12.9850 | -$0.01 | -0.08% | 14.96% |
| Corn | $3.9600 | $4.0475 | -$0.09 | -2.16% | -2.70% |
| Crude oil (NYMEX) (per barrel) | $48.39 | $49.66 | -$1.27 | -2.56% | 8.50% |