costarios
18-05-2004, 16:44
Stocks tread broadly higher
Home Depot beats forecasts; crude dips below $41
By Tomi Kilgore, CBS.MarketWatch.com
Last Update: 12:21 PM ET May 18, 2004
NEW YORK (CBS.MW) -- U.S. stocks enjoyed broad gains Tuesday, with the technology sector leading the way, as a strong earnings report and outlook from blue chip retailer Home Depot and stabilization in overseas markets emboldened investors.
A potential resolution of political turmoil in India and a pullback in crude prices also helped set a positive tone. New home construction data that was in line with expectations and comments from the Richmond Federal Reserve Bank president that inflation was "manageable" did not disturb the peace.
"Sellers are taking a breather, since we didn't get any bad news from the geopolitical arena," said James Park, senior trader Rodman & Renshaw. "But buyers are not coming back in swarms, however, as the market is still pricing in a lot of uncertainty."
The Dow Jones Industrials Average ($INDU: news, chart, profile) tacked on 75 points, or 0.8 percent, to 9,982, with 24 of 30 components gaining ground. The Dow had tumbled 106 points on Monday amid fears of increasing violence in Iraq (read more).
Dow component Home Depot (HD: news, chart, profile) paced the gains, rallying 3.6 percent after the home improvement retailer reported fiscal first-quarter earnings and revenue that rose above year-earlier levels and exceeded Wall Street expectations.
The company also raised its sales growth and earnings outlook for the year. See full story.
The S&P 500 Index ($SPX: news, chart, profile) advanced 10 points, or 0.9 percent, to 1,094 and the Nasdaq Composite ($COMPQ: news, chart, profile) stepped up 26 points, or 1.4 percent, to 1,902.
The S&P 500 had dropped 1.1 on Monday and the Nasdaq hit a seven-month low in intraday trading before closing down 1.4 percent.
Ned Riley, chief investment officer at State Street Global Advisers, said the market still lacks "a good sense of direction." He expects the market to be choppy this week, but feels most of the "gloom and doom" has already been factored in. Listen to audio report.
Breadth was firmly positive, with the number of advancing stocks outnumbering decliners by a 23 to 9 margin on the NYSE and by a 19 to 10 score on the Nasdaq exchange.
Volume of stocks trading higher was 455 million shares on the Big Board vs. down volume of 157 million shares, and 559 million shares on the Nasdaq vs. down volume of 100 million shares.
Retail (RTH: news, chart, profile), semiconductor ($SOX: news, chart, profile), networking ($NWX: news, chart, profile), biotech ($BTK: news, chart, profile) and airline (XX:$XAL: news, chart, profile) sectors were among the best performers, while gold ($GOX: news, chart, profile), oil ($OIX: news, chart, profile) and oil service ($OSX: news, chart, profile) sectors were among the few seeing weakness. See Industry Indexes.
A quiet evening in Iraq and speculation that OPEC will decide at an informal meeting in Amsterdam this weekend to boost production knocked June crude futures down 67 cents to $40.88 (read more). The killing of a key Iraqi official on Monday had prompted crude to spike up to $41.85 before closing at a record high of $41.55.
Gold futures eased $2.40 to $377.20. See Metals Stocks.
The positive mood started with a 2 percent gain in Tokyo's Nikkei 225 index, which was boosted by a stronger-than-expected gross domestic product report.
India markets rebounded sharply (read more), helping provide a lift to continental European and London markets, as Sonia Gandhi soothed investor fears by declining the prime minister position, and in turn backing reform-friendly Manmohan Singh as prime minister (read more). Concerns that a Gandhi-led government would turn back privatization plans sent India stocks to its biggest one-day drop on Monday. See Asia, Europe and London market reports.
"We have to look at all the markets on the global stage now," Rodman & Renshaw's Park noted. "They all affect each other."
Within the U.S., the Commerce Department said the rate of new home construction fell 2.1 percent to a seasonally adjusted rate of 1.97 million, while building permits rose 1.2 percent to a 2 million annual rate, a seven-month high. Both figures were in line with expectations. See full story.
"A recent rush to buy homes, telegraphed by...recent strong mortgage applications, suggests starts will stay robust near term, partly as buyers rush to avoid yet higher mortgage rates ahead," said UBS U.S. economist Maury Harris in a note to clients. "The recent bounce in mortgage rates will likely take a toll on housing as 2004 unfolds; however, stronger wage and job growth should temper the decline."
Also, the Fed's J. Alfred Broaddus Jr. said that while rising prices for commodities and consumer goods have "gotten the attention" of the Fed, productivity growth, a weaker dollar, slack labor markets and strong global competition kept inflationary risks "manageable."
He added that the Fed's statement that it can raise rates at a "measured" pace seemed "reasonable" to him, and there was no reason for the market to expect a repeat of the rapid rate hikes in 1994 (read more).
The data and Broaddus' comments couldn't stop the bond market from pulling back from the prior session's strong showing. The yield on the benchmark 10-year Treasury note ($TNX: news, chart, profile) rose 0.033 percentage points to 4.732 percent, after falling 0.089 percentage points on Monday. See Bond Report.
The U.S. dollar also recovered slightly, gaining 0.5 percent vs. the euro to $1.1960 and 0.6 percent against the Swiss franc to 1.2825. Meanwhile, the strong Japanese GDP data knocked the buck down 0.1 percent vs. the yen to 114.24. See Currencies.
Tomi Kilgore is a reporter for CBS.MarketWatch.com in New York.
Home Depot beats forecasts; crude dips below $41
By Tomi Kilgore, CBS.MarketWatch.com
Last Update: 12:21 PM ET May 18, 2004
NEW YORK (CBS.MW) -- U.S. stocks enjoyed broad gains Tuesday, with the technology sector leading the way, as a strong earnings report and outlook from blue chip retailer Home Depot and stabilization in overseas markets emboldened investors.
A potential resolution of political turmoil in India and a pullback in crude prices also helped set a positive tone. New home construction data that was in line with expectations and comments from the Richmond Federal Reserve Bank president that inflation was "manageable" did not disturb the peace.
"Sellers are taking a breather, since we didn't get any bad news from the geopolitical arena," said James Park, senior trader Rodman & Renshaw. "But buyers are not coming back in swarms, however, as the market is still pricing in a lot of uncertainty."
The Dow Jones Industrials Average ($INDU: news, chart, profile) tacked on 75 points, or 0.8 percent, to 9,982, with 24 of 30 components gaining ground. The Dow had tumbled 106 points on Monday amid fears of increasing violence in Iraq (read more).
Dow component Home Depot (HD: news, chart, profile) paced the gains, rallying 3.6 percent after the home improvement retailer reported fiscal first-quarter earnings and revenue that rose above year-earlier levels and exceeded Wall Street expectations.
The company also raised its sales growth and earnings outlook for the year. See full story.
The S&P 500 Index ($SPX: news, chart, profile) advanced 10 points, or 0.9 percent, to 1,094 and the Nasdaq Composite ($COMPQ: news, chart, profile) stepped up 26 points, or 1.4 percent, to 1,902.
The S&P 500 had dropped 1.1 on Monday and the Nasdaq hit a seven-month low in intraday trading before closing down 1.4 percent.
Ned Riley, chief investment officer at State Street Global Advisers, said the market still lacks "a good sense of direction." He expects the market to be choppy this week, but feels most of the "gloom and doom" has already been factored in. Listen to audio report.
Breadth was firmly positive, with the number of advancing stocks outnumbering decliners by a 23 to 9 margin on the NYSE and by a 19 to 10 score on the Nasdaq exchange.
Volume of stocks trading higher was 455 million shares on the Big Board vs. down volume of 157 million shares, and 559 million shares on the Nasdaq vs. down volume of 100 million shares.
Retail (RTH: news, chart, profile), semiconductor ($SOX: news, chart, profile), networking ($NWX: news, chart, profile), biotech ($BTK: news, chart, profile) and airline (XX:$XAL: news, chart, profile) sectors were among the best performers, while gold ($GOX: news, chart, profile), oil ($OIX: news, chart, profile) and oil service ($OSX: news, chart, profile) sectors were among the few seeing weakness. See Industry Indexes.
A quiet evening in Iraq and speculation that OPEC will decide at an informal meeting in Amsterdam this weekend to boost production knocked June crude futures down 67 cents to $40.88 (read more). The killing of a key Iraqi official on Monday had prompted crude to spike up to $41.85 before closing at a record high of $41.55.
Gold futures eased $2.40 to $377.20. See Metals Stocks.
The positive mood started with a 2 percent gain in Tokyo's Nikkei 225 index, which was boosted by a stronger-than-expected gross domestic product report.
India markets rebounded sharply (read more), helping provide a lift to continental European and London markets, as Sonia Gandhi soothed investor fears by declining the prime minister position, and in turn backing reform-friendly Manmohan Singh as prime minister (read more). Concerns that a Gandhi-led government would turn back privatization plans sent India stocks to its biggest one-day drop on Monday. See Asia, Europe and London market reports.
"We have to look at all the markets on the global stage now," Rodman & Renshaw's Park noted. "They all affect each other."
Within the U.S., the Commerce Department said the rate of new home construction fell 2.1 percent to a seasonally adjusted rate of 1.97 million, while building permits rose 1.2 percent to a 2 million annual rate, a seven-month high. Both figures were in line with expectations. See full story.
"A recent rush to buy homes, telegraphed by...recent strong mortgage applications, suggests starts will stay robust near term, partly as buyers rush to avoid yet higher mortgage rates ahead," said UBS U.S. economist Maury Harris in a note to clients. "The recent bounce in mortgage rates will likely take a toll on housing as 2004 unfolds; however, stronger wage and job growth should temper the decline."
Also, the Fed's J. Alfred Broaddus Jr. said that while rising prices for commodities and consumer goods have "gotten the attention" of the Fed, productivity growth, a weaker dollar, slack labor markets and strong global competition kept inflationary risks "manageable."
He added that the Fed's statement that it can raise rates at a "measured" pace seemed "reasonable" to him, and there was no reason for the market to expect a repeat of the rapid rate hikes in 1994 (read more).
The data and Broaddus' comments couldn't stop the bond market from pulling back from the prior session's strong showing. The yield on the benchmark 10-year Treasury note ($TNX: news, chart, profile) rose 0.033 percentage points to 4.732 percent, after falling 0.089 percentage points on Monday. See Bond Report.
The U.S. dollar also recovered slightly, gaining 0.5 percent vs. the euro to $1.1960 and 0.6 percent against the Swiss franc to 1.2825. Meanwhile, the strong Japanese GDP data knocked the buck down 0.1 percent vs. the yen to 114.24. See Currencies.
Tomi Kilgore is a reporter for CBS.MarketWatch.com in New York.