Wall Street jumps after economic readings suggest economy might be poised to show recovery
Madlen Read
Business Writer
Associated Press
New York, New York, U.S.
Monday, 19 May 2008, 12:11 pm U.S. EDT
Wall Street jumped Monday after a new report suggested to investors that the economy, while sluggish, is likely still growing. The Dow Jones Industrial Average (DJIA) rose more than 100 points.
The Conference Board's leading economic indicators report showed a 0.1% rise for April, following a similar uptick in March. The index, aimed at predicting economic activity in the next three to six months, bolstered investors' belief that the overall U.S. economy, while weak, is positioned for recovery.
After five months of declines in the index, some investors had been worried that March's increase was an anomaly -- so April's advance was met with relief, said Hugh Johnson, chief investment officer of Johnson Illington Advisors.
Though stocks made sizable gains Monday, many investors likely remain mindful of the rising price of oil and its effect on consumer spending.
Crude climbed above $127 a barrel on the New York Mercantile Exchange, while the price of a gallon of regular gasoline topped $4 for the first time in two U.S. metropolitan areas. Meanwhile, Lowe's Cos. posted a first-quarter profit decline and issued an outlook for the year that came in below analyst estimates. The second-largest home improvement chain fell 64 cents, or 2.5%, to $24.25.
In midday trading, the Dow rose 110.08, or 0.85%, to 13,096.88.
Broader stock indicators also rose. The Standard & Poor's 500 index advanced 13.25, or 0.93%, to 1,438.60, and the Nasdaq composite index rose 20.70, or 0.82%, to 2,549.55.
Government bond prices fell as stocks climbed. The yield on the benchmark 10-year Treasury note, which moves opposite its yield, rose to 3.88% from 3.85% late Friday.
The dollar rose against most other major currencies, while gold prices also climbed.
Light, sweet crude fell 24 cents to $126.05 a barrel on the Nymex.
In corporate news, Microsoft Corp. has renewed talks with Yahoo Inc. about a possible deal to bolster the companies' position in the online search and advertising markets. The software maker did not say if the discussions included a takeover of Yahoo. Yahoo said its directors "remain open to pursuing any transaction which is in the best interest of our stockholders."
Microsoft fell 40 cents to $29.59, and Yahoo rose 23 cents to $27.89.
General Motors Corp. rose after one of its biggest suppliers reached a tentative labor deal with the United Auto Workers. The agreement with American Axle & Manufacturing Holdings Inc. may end a nearly three-month strike by 3,650 U.S. hourly workers. GM advanced 48 cents, or 2.2%, to $21.16.
The Russell 2000 index of smaller companies rose 5.48, or 0.74%, to 746.65.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 385.1 million shares.
In overseas trade, Tokyo's Nikkei closed up 0.35%. In Europe, London's FTSE added 1.15%, Frankfurt's DAX rose 0.97% and Paris' CAC 40 was up 1.26%.
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