Rally Continues for Stocks - TheStreet

Rally Continues for Stocks

More deals are in the headlines. Treasury prices decline.
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Updated from 1:12 p.m. EDT

Stocks in the U.S. marched higher in a shortened session Tuesday, giving the major indices a two-day winning streak to start the third quarter.

The

Dow Jones Industrial Average

was up 41.87 points, or 0.31%, at 13,577.30, and the

S&P 500

added 5.44 points, or 0.36%, to 1524.87. The

Nasdaq

was ahead by 12.65 points, or 0.48%, at 2644.95.

New York trading ended early at 1 p.m. EDT, and Wednesday will be a day off in order to observe the Independence Day holiday.

Volume was meager for the abbreviated session. Only 1.57 billion shares changed hands on the

New York Stock Exchange

, as advancers topped decliners by a 5-to-3 margin. Volume on the Nasdaq reached 1.07 billion shares, with winners outpacing losers 8 to 7.

"There's not too much to say about today's session, even though there was a little buying ahead of the holiday," said Michael Sheldon, chief market strategist with Spencer Clarke LLC.

"Historically, the two days following the July 4th holiday haven't been positive for markets, so we could see profit-taking at the end of this week," he added. "Whatever traders that will be around will be focusing on Friday's important nonfarm payrolls report."

The latest rise marked a continuation of the previous session's advance, when merger activity and economic data lifted the market.

The Dow ended the prior day up 126.81 points, or 0.95%, to 13,535.43. The S&P rose 16.08 points, or 1.07%, to 1519.43, and the Nasdaq increased 29.07 points, or 1.12%, at 2632.30.

"With the start of the third quarter, investors have an opportunity to take on new riskier positions and have three months to see if they pan out," said Marc Pado, U.S. market strategist with Cantor Fitzgerald.

On the corporate side, more deals were being contemplated, including a move by

Kraft

(KFT)

, who said it plans to buy the cookie business of France's

Groupe Danone

(DA)

for more than $7 billion. Kraft shed 87 cents, or 2.5%, to close at $34.66. Groupe Danone gave back 20 cents, or 1.2%, to $16.65.

Elsewhere,

Teck Cominco

(TCK)

made an offer for fellow Canadian miner

Aur Resources

worth C$4.1 billion in cash and stock, extending a trend toward consolidation in the group. Teck Cominco fell by $1.40, or 3.2%, to $43.06.

Meanwhile, a study showed that

Merck's

(MRK) - Get Report

painkiller Vioxx, which was pulled off the market in 2004, might have been dangerous sooner than the company believed, according to

The Wall Street Journal

.

The newspaper, which reviewed the so-far unpublished study, said heart problems could emerge soon after people started on the drug. Merck has said risks only began after 18 months of use, and that has been one of the keys of its defense against the thousands of Vioxx-related lawsuits it's facing. Merck added 26 cents, or 0.5%, to $49.83.

Shares of

Movie Gallery

(MOVI)

plunged 65.1% after the movie renter said it will default on certain financial requirements due to weak second-quarter earnings. The stock dove $1.23 to close at 66 cents.

As for research calls, UBS upgraded

Business Objects

(BOBJ)

to buy from neutral, and the firm downgraded

Caterpillar

(CAT) - Get Report

to reduce from neutral. Business Objects was higher by 2.2% to $40.32, while Caterpillar sank 3.1% to $77.99.

Automakers were also posting vehicle sales results for June.

Ford

(F) - Get Report

said sales fell 8.1% last month, and

DaimlerChrysler

(DCX)

posted a 2% decline.

General Motors

(GM) - Get Report

will post results later in the day.

Oil had been lower, but it turned around and rose 3 cents to $71.12 a barrel. Natural gas was off by 3 cents to $6.72 per million British thermal units. Among metals, gold was lower by $3.40 to $655.80 an ounce, and silver was down 4 cents to $12.70.

Treasury prices tumbled after the 10 a.m. EDT reports on pending home sales and factory orders. The National Association of Realtors said that pending home sales slid 3.5% in May, slightly more than expectations.

The Commerce Department said that factory orders fell 0.5% in the month, better than expectations for a 1.2% decline. Excluding transportation, factory orders were higher by 0.7%.

The 10-year note was down 14/32 in price to yield 5.05%, and the 30-year bond eased 25/32 in price, yielding 5.15%, The dollar was lower against the world's major currencies.

Overseas, stocks were generally stronger. Tokyo's Nikkei was unchanged, but Hong Kong's Hang Seng surged 1.7%. London's FTSE was up 0.8%, and Frankfurt's DAX climbed 1.2%.