Investors sent US stocks surging today, propelling the Dow Jones industrials up more than 115 points and into the shadow of 10,000 after a pair of reports showed better-than-expected growth in the manufacturing sector and construction spending.
Investors returned to the market with enthusiasm following a holiday week of lighter trading, and the manufacturing report from the Institute for Supply Management contributed to their zeal, said Todd Leone, managing director of equity trading at SG Cowen Securities.
“I think a lot of people were off last week, so they’re coming in and buying today,” he said.
The Dow closed up 116.59, or 1.2%, at 9,899.05, following a gain last week of 1.6%. The last time the index of 30 actively traded blue chip stocks closed higher was May 31, 2002, when it ended the day at 9,925.30 – it last closed above 10,000 on May 24, 2002.
The Nasdaq composite index closed at its highest point in nearly two years, up 29.56, or 1.5%, at 1,989.82, following a weekly gain of 3.5%. The tech-dominated index last closed higher on January 15, 2002, at 2,000.91.
The Standard & Poor’s 500 index also reached a significant high, rising 11.92, or 1.1%, to close at 1,070.12, after gaining 1.5% last week. The S&P last closed higher on May 28, 2002, when it stood at 1,074.55.
“The last two months of the year are traditionally a strong seasonal period for the market, and we’ve had a strong 10 months going into it,” said Steven Goldman, chief market strategist at Weeden & Co in Greenwich, Conn. ”All in all, the markets are moving to new recovery highs here.”
Manufacturing grew for a fifth straight month, according to the ISM report, boding well for the overall economy in the final quarter of the year. The industry group’s manufacturing index rose to 62.8 last month from 57 in October.
An index reading above 50 indicates expansion – one below 50 indicates that manufacturing activity is contracting. From March to June, the manufacturing index was below 50.
Separately, the Commerce Department reported construction spending registered its best month on record in October, a promising sign for the recovery’s staying power. The total value of building projects in October came in at a seasonally adjusted 922 billion – a 0.9% increase over the previous month. Analysts had forecast a rise of 0.6%.
Investors were also keeping a close eye on retailers following the Thanksgiving weekend. Merrill Lynch called the weekend “a relative success,” with interested consumers, planned promotions and reasonable weather, and predicted the retailing sector would continue to perform well.
But Goldman Sachs was cautious on retailing bellwether Wal-Mart, noting that heavy consumer spending in the fourth quarter could result in some pullback early next year. Wal-Mart closed down 1.14 at 54.50, despite reporting that sales at its stores over the holiday weekend were up 6.3% compared to last year.
Boeing ended the day down 37 cents at 38.02 after chairman and chief executive Phil Condit announced plans to resign. Condit’s resignation from the aerospace manufacturer came just days after two other Boeing officials were fired for an alleged ethics breach.
Walt Disney Co rose 8 cents to 23.17, following news that vice-chairman Roy Disney had stepped down from the board of directors and called on chairman and chief executive Michael Eisner to resign. Disney’s board had informed the 73-year-old nephew of the company’s founder that he would not be recommended for another term, as he is over the mandated retirement age of 72.
DuPont gained 1.24 to close at 42.70 after declaring that it would take aggressive actions to ensure its global competitiveness as a science company. DuPont said it was looking to cut costs by about 450 million next year and 900 million in 2005, in part through job cuts.
IBM gained 47 cents to close at 91.01 after announcing plans to reorganise its 13.1 billion software business.
Advancers outnumbered decliners more than 3 to 1 on the New York Stock Exchange. Volume was 1.34 billion shares, ahead of the 491.10 million shares traded on Friday, when the market closed at 1pm for the holiday weekend.
The Russell 2000 index, which tracks smaller company stocks, ended the day up 8.08, or 1.5%, at 554.59.