Updated from 4:14 p.m. EDT)
As if on cue, the economy kicked off the second half with nascent signs of the recovery upon which Wall Street has pinned its hopes -- and the markets responded approvingly.
was firmly in the bulls' grip by midmorning after some strong manufacturing data eclipsed earnings worries generated earlier by a warning from
(MMM). But gains were more elusive on the
Nasdaq Composite Index
, as investors took profits following Friday's late-day rally.
Dow Jones Industrial Average ended the day up by 91.25 points, or 0.87%, to 10,593.65; the Nasdaq lost 11.81 points, or 0.55%, to 2148.73; and the
, which tracks the broader market, closed up by 12.35 points, or 1.01%, to about 1236.73.
| Major Indices
| S&P 500
| Russell 2000
| 10-Year Treasury
|| 97 15/32
| Market data as of: 4:10 PM ET, Mon Jul 2 2001
Volume was tame ahead of the Fourth of July. The market closes at 1 p.m. EDT Tuesday and remains closed Wednesday in observance of the holiday.
"The NAPM should carry us through today," said Peter Blatchford, trader at
. But he said he didn't know if the data was strong enough to carry stocks higher through tomorrow morning and Thursday. "The market is in a mode where the equity markets are anticipating improvement, but it just depends on how bad imminent preannouncements are," he said.
National Association of Purchasing Management's
purchasing managers' index
, a key gauge of the manufacturing sector, showed substantially more strength than economists had predicted. Released at 10 a.m., the indicator showed a 44.7 reading for June, above the expected 42.8 and May's 42.1 reading. The June number marks the indicator's highest level since the 47.9 reading of November 2000. The NAPM signals expansion when above 50 and contraction when below it.
Meanwhile, this morning's
personal income and spending
data, released at 8:30 a.m. EDT, showed that
consumers continue to spend
despite weakness in income. Income grew a tenth of a percent more slowly than was expected, and spending rose a tenth of percent faster than was expected for both May and April. U.S. construction spending, meanwhile, rose 0.3% in May, right in line with economists' forecasts. Construction spending for the month of April was revised up to 0.4% from 0.3%.
On Friday, the Nasdaq rallied sharply between 4 p.m. and 5 p.m. after the exchange extended trading to make up for time lost to earlier
Tech stocks rose late in the day amid end-of-quarter window dressing and the annual rebalancing of the
stock indices. At the end of each quarter, managers dress up their portfolios to present to shareholders; the Russell rebalancing forces money managers with funds tracking the indices to sell and buy stocks to match the changes.
At 2 p.m., the Nasdaq released a partial list of securities for which Friday's closing prices were adjusted. That
included 65 securities, including
, among others, according to the NasdaqTrader.com site.
The exchange will post further changes in Vendor Alerts on NasdaqTrader.com. The
closed off by 2.8%.
This morning, investors sold stocks in reaction to 3M's news that it was lowering its targets for second-quarter earnings and expecting overseas weakness to hurt its second-half results. The company's stock posted gains today, though, closing higher by 2.8% to $117.26.
Earnings confession season -- when companies warn they expect to miss performance targets -- is expected to wind down this week. Company after company has warned over the past four weeks that second-quarter earnings and sales will fall short of forecasts. Wall Street is now hoping that corporate earnings will accelerate in the fourth quarter of this year or early next year. And some strategists are betting stocks will begin to rise in anticipation of that recovery.
Optimism that an economic recovery might come later this year was reignited by the
fifth interest-rate cut last Wednesday and some signs of strength in economic data. After cutting rates by a half-point five times this year, the Fed dropped the
lending target by a quarter-point to 3.75% and indicated that it may be winding down its rate-cutting program.
Tobacco stocks were lower today after the
refused to hear an appeal by tobacco company
Brown & Williamson
for a health lawsuit it lost against a U.S. smoker. The case is the first such lawsuit to be won by a smoker against a tobacco company. The
Dow Jones U.S. Tobacco Index
closed off by 3.3%.
Elsewhere in sector moves, chip and PC stocks as well as banks and retailers gained today. Brokers, transportation, gold and energy stocks were all lower.
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