NEW YORK (MarketWatch) -- U.S. stocks ended higher Monday as a more than
7% jump in shares of General Motors Corp. helped the Dow Jones Industrial
Average close above 11,000 for the first time in 4 1/2-year years.
The Dow industrials ended up 52.59 points at 11,011.90, the first time the
benchmark index has closed above the psychologically key 11,000 mark since
June 7 2001. At one stage, the Dow rose as high as 11,020.15.
The Nasdaq Composite Index was up 13.07 points at 2,318. The tech-rich
index is now at its best levels in nearly 5 years.
The S&P 500 rose 4.7 points to 1,290.15.
"There was a shot of optimism from the Fed minutes and I think that's what
has carried the market through so far," said Ed Peters, chief investment
officer at Pan Agora, referring to remarks made by Fed officials at its
December interest-rate meeting that an end to the central bank's cycle of rate
rises is in the offing.
Peters said an end to interest-rate hikes eases fears that the Fed will
raise rates too much and choke off growth in corporate earnings.
Commenting on the Dow hitting 11,000, he said it was "psychologically key"
for the market.
"Other indexes, like the small caps, have been hitting all-time highs
already so this would be good for blue chips and encouraging for everybody."
On the broader market for equities, advancers outpaced decliners by more
than two to one on the New York Stock Exchange and by 18 to 11 on Nasdaq.
By sector, housing, semiconductor companies, brokers, drug, retail and
computer hardware stocks put in some of the most significant gains.
With the pullback in oil prices, oil services stocks was one of the weaker
sectors. Utilities also ended the session lower.
Volume was 1.67 billion on the Big Board and 2 billion on the Nasdaq.
Dollar, gold, bonds, crude
The dollar came off a two-month low against the yen which came after China
said last week it's planning to diversify its currency reserves, boosting the
Japanese currency.
Ashraf Laidi, chief currency analyst at MG Financial Group, said that the
dollar rose from its lows "because traders know that Japan is going to make
cautious remarks on the yen appreciation soon."
According to Laidi, Japanese monetary policy generally favors moderate
currency moves and resists both excessively rapid appreciation and
depreciation.
The dollar was last off just 0.02% at 114.44 yen, off a morning low of
113.75. The euro, meanwhile, gave up some of the solid gains it notched last
week. The euro was last down 0.6% at $1.2075.
Gold futures ended above $550 an ounce, logging their highest close since
January 1981, helped by recent dollar weakness. Gold for February delivery was
up $9.30 at $550.50 an ounce.
On the bond market, Treasurys ended unchanged after Federal Reserve
officials said inflation expectations should remain anchored and growth should
be robust this year.
The benchmark 10-year-note ended was at 100 31/32 with a yield of 4.37%.
In a quiet session for data, outstanding U.S. consumer debt fell for the
second month in a row in November, the Federal Reserve said. It is the first
time in 13 years consumer credit has fallen for two straight months.
In the energy pits, crude-oil futures eased on forecasts of mild weather
for the northeast, with last week's inventory data showing supplies not as
tight as anticipated, adding to the pressure on prices.
Also, acting OPEC Secretary-General Mohammed Barkindo said the oil cartel
is unlikely to decide on a production cut when it meets on Jan. 31, according
to John Gerdes, an analyst at Gerdes Group. In recent weeks, officials from
OPEC members, particularly Iran, have called for a 1 million-barrel-per-day
output cut.
Crude for February delivery ended down 71 cents at $63.50 a barrel.
Stocks in play
General Motors Corp. shot up 7.7% to $22.41, making it the biggest
percentage gainer within the Dow industrials. The stock, a drag on the Dow in
2005, was upgraded by Goldman Sachs, which said that dwindling concern about a
possible bankruptcy-law filing should lift it back to the mid-$20s by mid-
year.
Positive sentiment surrounding the 2006 Detroit Auto Show was also helping
the car sector. Ford Motor Co. was up 1.2% at $8.62 while shares of
DaimlerChrysler AG rose 1.4% to $54.55.
DaimlerChrysler was getting a further boost from a Financial Times
Deutschland report that it would consider selling its loss-making Smart car
division.
After the bell Monday, Alcoa Inc. kicked off the earnings season with its
fourth-quarter results.
The aluminum producer posted net earnings of 26 cents a share, down from
30 cents a share a year ago. Revenue for the three months ended Dec. 31
totaled $6.67 billion, up from $5.98 billion a year earlier. Analysts polled
by Thomson First Call had expected the Pittsburgh-based company to hand in
earnings of 37 cents a share on $6.69 billion in revenue. Alcoa, a Dow
component, closed ahead of the report at $30.57 a share, up 36 cents, or 1.2%,
for the day.
Shares of J.P. Morgan rose 1.6% to $40.67 after it and Merrill Lynch were
upgraded by Prudential Equity Group. Prudential cited improving merger and
acquisition activity and likely growth in their asset-management and private-
equity businesses. Merrill shares were up 1.5% at $69.72.
International Business Machines, also in the Dow, fell 1.4% at $83.73. The
stock was downgraded to neutral from overweight at J.P. Morgan, with the
broker citing risks in services and hardware.
Shares in Boston Scientific dipped 36 cents to $25.88 after the company
offered up details of its $25 billion bid for fellow medical-devices maker
Guidant Corp. . Guidant shares were up 2.5% at $69.
Amazon.com fell 79 cents to $47.08 after J.P. Morgan downgraded the stock
to underweight, citing worries about U.S. growth.
In other tech-sector news, Cisco Systems advanced 1.5% to $19.06. That
share was boosted to an overweight rating by Prudential.
Shares in Tyco International Ltd. climbed 3.5% to $31.04 on a Wall Street
Journal report that it is considering a plan that would see its electronics
and health-care businesses split off from the rest of the company.
Mark Cotton is a reporter for MarketWatch in New York.
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