Stocks Move Higher on Steel Rally, Kellogg's Cereal Profits
NEW YORK (TheStreet) -- U.S. stocks sustained their year-long rally on Monday amid higher profits from Kellogg (K), the world's largest cereal maker, and a rally in steel stocks sparked by an upbeat industry report from Goldman Sachs (GS).
The S&P 500 gained 0.4% to close at 1,767.98 while the Dow Jones Industrial Average added 0.2% to finish regular trading at 15,639.57. The Nasdaq also rose, closing 0.4% higher at 3,936.59.
Markets continued to rise into the 11th month of 2013 as the benchmark S&P 500 extended its gain for the year to 24%, poised for its best performance since 1995 during the heyday of the Internet Boom.
Along with a full slate of third-quarter earnings reports, investors this week will be watching for the government's October jobs reports scheduled for Friday. The report may offer investors further insight into whether the Federal Reserve will seek to curb the bond-buying stimulus measures that have helped boost stocks for more then four years.
Kellogg gained 0.7% to $62.74 after posting a 3% rise in quarterly profit helped by lower production costs and an announcement that the convenience foods maker of Battle Creek, Michigan plans to cut 7% of its workforce by 2017. Kellogg reported net income for the quarter of $326 million, or 90 cents per share, up from $318 million or 89 cents per share, a year earlier.
Steelmakers U.S. Steel (X), AK Steel (AKS) and Steel Dynamics (STLD) all advanced on Goldman Sachs' optimistic analysis of the sector while Reliance Steel (RS) was little changed for the day. Goldman analysts Sal Tharani and Chelsea Bolton, in an investor report published Monday, upgraded the steel sector to "neutral" from "cautious" citing the likelihood of a "sustainable recovery over the coming years"."Although volatility associated with this deeply cyclical sector will remain a norm, we believe that investors should start to look beyond near-term headwinds. The supply-demand fundamentals for steel are starting to look more appealing," wrote the Goldman analysts. Vulcan Materials (VMC) surged 7.6% to $57.74 as the construction materials maker posted a profit of $41.4 million, or 31 cents a share, up from $14.3 million or 11 cents a share, a year ago. Analysts had expected expected earnings of 27 cents a share. HSBC (HBC), Europe's largest bank, advanced 2.5% to $56.51 as profit for the nine months through September rose 23% from the same period a year ago to $13.5 billion on cost cuts and stable revenue. CEO Stuart Gulliver said the bank made further progress toward simplifying and restructuring the company as evidenced by the recent sale of its Panama business.
Earlier in the day, investors got a boost after St. Louis Fed President James Bullard said in an interview on CNBC that there was "no hurry" to curb the pace of the central bank's stimulus measures adding that inflation remained low and job growth tepid. In other corporate news, Twitter TWTR increased the price of its initial public offering due to strong investor interest for its debut this week. Its shares will now be offered for between $23 and $25, giving a company valuation of up to $17.4 billion - the largest technology IPO since Facebook floated last year. Twitter will raise up to $2 billion by selling about 13% of the company or up to 80.5 million shares. Additionally, positive economic data was a further fillip for sentiment. U.S. factory orders rose 1.7% in September after dropping 0.1% in August. Economists had forecasts a gain of 1.8% for September. Economic activity in the manufacturing sector grew in October for the fifth consecutive month, according to the Manufacturing ISM Report On Business.. The PMI was 56.4 percent up from September's reading of 56.2 percent, with October's reading being the highest in 2013. The December contract for West Texas Intermediate crude added a penny to settle at $94.62, reversing a dip earlier in the trading session to its lowest price in nearly four months. Gold December futures, the most actively traded contract, closed up $1.50 to $1,314.70 an ounce. The benchmark 10-year Treasury was gaining 4/32 to dilute the yield to 2.607%, while the dollar was off 0.2% to $80.56, according to the U.S. dollar index. --By Jane Searle in New York
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