Updated from 4:08 p.m. EDTStocks ramped up in Monday's final hour of trading to post solid gains, after investors received a positive economic reading on the nation's service sector. Extending the market's winning streak to three days, the Nasdaq led the way, closing up 21.94 points, or 1.07%, to 2079.11. The Dow closed up 87.78 points, or 0.84%, to 10,558.37; and the S&P 500 added 8.73 points, or 0.76%, to 1150.54.The 10-year Treasury note, which gave up about 2 points in price Friday, was recently down another 18/32 to yield 4.21%, while the dollar was stronger against the yen and euro. Volume on the New York Stock Exchange approached 1.4 billion shares, and decliners outnumbered advancers by about 5 to 4 despite the day's gains. On the Nasdaq, over 1.7 billion shares changed hands, and advancers outpaced decliners by about 3 to 2. The Nasdaq has now moved to within a point of its Feb. 18 high of 2080.35. "What's interesting is that we're overbought on a short-term basis by a lot of different measures, and you would expect in that situation that you would get some kind of pullback or consolidation," said John Hughes, equity strategist at Shields & Co. "The fact that we ramped up here before the bell suggests that there may be some strength here, and we may not get much of a pullback here." The Institute of Supply Management's services index beat Wall Street's expectations, rising to 65.8 in March, up from 60.8 in February. Richard Williams, equity strategist at Summit Analytic Partners, was impressed by the release, but he is waiting for the market to confirm its direction in the upcoming, first-quarter earnings season before he takes a strong position. "My theory is that this quarter may not be as good as people expect it to be," said Williams. "This is one of the most important earnings seasons we've seen in a long time, in part because of the election and in part because we've waited so long for the economy to kick in jobs and profits from companies. So now, this is where we'll either see it or we won't." Michael Strauss, chief economist at Commonfund, is more optimistic. He expects year-over-year earnings growth of 20% for the first quarter. "One of the things that is helping to provide support to the equity market is the strength of the economy and the associated strength of earnings," said Strauss. "It's continuing to provide some very nice upside surprises to the equity market." Overseas stocks were higher, with London's FTSE 100 closed up 0.3% to 4481, while Germany's Xetra DAX was up 1% to 4049. In Asia, Japan's Nikkei rose 1.2% to 11,958, while the Hang Seng in Hong Kong added 0.4% to 12,732.
J.C. Penney ( JCP) reached an agreement to sell its Eckerd drugstore chain for $4.5 billion. The buyers are Canada's Jean Coutu Group and CVS ( CVS). Shares of J.C. Penney closed up 7 cents, or 0.2%, to $34.90. WellChoice ( WC) is reportedly in talks to buy Oxford Health Plans ( OHP). The Wall Street Journal said that the health insurer has considered offering Oxford shareholders a premium of around 25%. WellChoice shares rose 5% last week to $37.45, while Oxford gained 6% to $50.32. On Monday, they added 1% and 15.2% respectively. Altria Group ( MO) is nearing a deal with the European Commission to pay $1 billion over 12 years to settle allegations it colluded in cigarette smuggling, according to media reports. Its shares closed up 42 cents, or 0.8%, to $55.29. Nortel ( NT) said the Securities and Exchange Commission has issued a formal order of investigation into an accounting review that led to the suspension of its CFO. Its shares closed down 23 cents, or 3.7%, to $6.06. Cigna ( CI) raised its earnings outlook for the first quarter of 2004 and the full year. The insurance company expects to earn $245 million to $275 million, or $1.75 to $1.95 a share, from continuing operations before special items in the quarter ended March 31. For all of 2004, the company expects to earn $720 million to $780 million on the same basis. Its shares added $6.90, or 11.4%, to $67.55. No economic news is due for release Tuesday. Earnings announcements are scheduled before the opening bell from International Speedway ( ISCA), expected to report first-quarter earnings of 52 cents a share, up from last year's 48 cents a share; and UTI Worldwide ( UTIW), expected to report fourth-quarter earnings of 32 cents a share, up from 26 cents a share in the same quarter last year. Alcoa ( AA), General Electric ( GE), Yahoo! ( YHOO), Rite Aid ( RAD) and Abbott Laboratories are all scheduled to release quarterly earnings results this week, kicking off the upcoming wave of first-quarter announcements.