US stocks gain despite oil and GM news

Wall Street extended its November rally with modest gains today despite pressure from rising oil prices and a major restructuring plan at General Motors Corp.

A raft of acquisition news carried some stocks higher, but volume was light and was expected to remain so ahead of Thanksgiving. There was also a muted reaction to a Conference Board report that the top economic indicators rose 0.9% last month, reversing a 0.8% decline in September.

The Standard & Poor’s 500 and Nasdaq composite indexes pushed past four-year highs reached Friday as an improving economic backdrop energised the market. But many traders were awaiting indications of how retailers will fare during this year’s holiday rush, which starts Friday.

“You’re going to hear a lot of banter about (retail sales) this week because consumers are such a large part of the economy,” said Art Hogan, chief market analyst for Jefferies & Co. Hogan said investors may react to early sales reports, “but it doesn’t mean a whole lot until we have the hard data.”

Meanwhile, forecasters said a nearing snowstorm could hit several northeastern states by midweek, pushing crude oil higher on renewed supply concerns. A barrel of light crude added 49 cents to US$57.70 (€49.20) on the New York Mercantile Exchange.

The Dow Jones industrial average rose 53.95, or 0.5%, to 10,820.28, the index’s highest close since March 10. The advance also put the Dow into positive territory for the year.

Broader stock indicators were also higher. The S&P 500 added 6.58, or 0.53%, to 1,254.85, and the Nasdaq gained 14.60, or 0.66%, to 2,241.67. Both indexes remained at four-year highs.

Bonds rose, with the yield on the 10-year Treasury note sliding to 4.47% from 4.5% late Friday. The US dollar was mostly higher against other major currencies in European trading, while gold prices climbed.

GM raised by 5,000 to 30,000 the number of jobs it plans to cut in an effort to slash US$7bn (€5.97bn) of expenses by next year, US$1bn (€0.85) more than previously estimated. The ailing carmaker is also shutting nine North American assembly plants and three service and parts facilities. GM sank 47 cents to 23.58.

Mergers and acquisitions again dominated the day’s news. Mentor Corp. offered US$2.2bn (€1.88bn) in stock for Medicis Pharmaceutical Corp, which refused the bid and said it is committed to its proposed takeover of Inamed Corp. Last week, Allergan Inc. outbid Medicis for Inamed with a US$3.2bn (€2.73bn) offer. Mentor dropped 4.79 to 51.35 , Medicis surged 3.82 to 31.57, Allergan lost 65 cents to 99.60 and Inamed rose 2 cents to 83.33.

Defence contractor Computer Sciences Corp. tumbled 6.47 to 48.38 after The Wall Street Journal reported Saturday that Lockheed Martin Corp. and three private equity firms have ended talks of buying out the company. Lockheed, meanwhile, jumped 1.22 to 61.18.

Tech stocks got some positive news from TiVo Inc., which said it is expanding its video-recording service so users can upload television shows to Apple Computer Inc’s iPods or Sony Corp.’s PlayStation Portable. TiVo gained 23 cents to 5.50, Apple rose 40 cents to 64.96 and Sony added 1.25 to 36.46.

Advancing issues led decliners by more than 5 to 3 on the New York Stock Exchange, where volume of 1.56bn shares lagged the 1.81bn shares changing hands at the same point Friday.

The Russell 2000 index of smaller companies rose 6.74, or 1%, to 678.96.