Wall Street Tries to Shake Off January Blues

Wall Street Tries to Shake Off January Blues
Copyright By THE ASSOCIATED PRESS
Published: February 1, 2010
http://www.nytimes.com/2010/02/02/business/02markets.html?hpw


Shares on Wall Street rose Monday as a flurry of reports bolstered hopes that the economy is recovering.

The stronger reports on manufacturing activity and personal incomes helped shore up the market’s sentiment after three losing weeks that left stocks with a loss for January. Investors were already becoming more optimistic in part because of news on Friday that the economy grew at the fastest pace in six years in the final three months of 2009.

Major indicators started higher and kept the momentum up through midday trading. The Dow Jones industrial average rose more than 100 points, and other indexes logged similar gains. Energy stocks led the market higher following a strong earnings report from Exxon Mobil.

In economic news, manufacturing activity in the United States grew in January for a sixth consecutive month to the strongest level since August 2004, according to the Institute for Supply Management. The trade group said factories increased production as customers replenished inventories.

The manufacturing index jumped to 58.4 in January from 54.9 in December. Analysts polled by Thomson Reuters had expected a level of 55.5. Any reading above 50 signals growth.

Meanwhile, the Commerce Department said consumer spending increased 0.2 percent in December, its third monthly gain. The government also said personal income increased more than expected in December.

“The economy and the recovery seem to be on track. The GDP number on Friday and the ISM number today confirm that,” said Kevin Shacknofsky, portfolio manager of the Alpine Dynamic Dividend Fund in Purchase, N.Y.

The government reported last Friday that the American economy grew at an annual rate of 5.7 percent in the final three months of 2009, a pace far stronger than economists had forecast.

The positive signals in the economic reports lent support to a market that fell sharply in late January, marking its worst monthly performance since the bear market early last year. The Dow Jones industrials reached a 15-month high of 10,725.43 on Jan. 19 but is still down 6.1 percent since then.

In early afternoon trading, the Dow rose 111.77 points, or 1.1 percent. The broader Standard & Poor’s 500-stock index rose 13.44, or 1.2 percent. The Nasdaq rose 19.84 points, or 0.92 percent.

European stock markets settled higher. The FTSE 100 in London was up 58.89 points, or 1.14 percent to 5,247.41, while the DAX in Frankfurt rose 45.69 points, or 0.81 percent, to 5,654.48. The CAC-40 in Paris was 22.65 points or 0.6 percent higher. to 3,762.01.

Indexes were mixed in Asia. In Tokyo, the Nikkei fluctuated before closing up 6.98 points, or 0.1 percent, at 10,205.02 while Hong Kong’s Hang Seng index rebounded from its early fall to finish 0.6 percent higher to 20,243.75.

In China, news that manufacturing activity was still strong in January was taken as more evidence the government will maintain its efforts to keep a lid on growth and inflation. Shanghai’s key index led Asia’s slide, falling 47.93, or 1.6 percent, to 2,941.36. Markets in Australia, Singapore and Taiwan also lost ground.

Toyota announced Monday that it had started sending a fix to dealers for recalled vehicles and that it would be available later this week.

And Exxon Mobil, the world’s largest publicly traded oil company, said that its profit dropped 23 percent in the fourth quarter, reflecting lower oil prices and weaker demand for fuels in a slowing economy. Exxon reported net income of $6.05 billion, or $1.27 a share, in the past quarter. That compared with $7.82 billion, or $1.54 a share, in the period a year ago.

President Obama sent the Congress on Monday an $3.83 trillion budget that would pour more money into the fight against high unemployment and bolster taxes on the wealthy. The nation’s unemployment rate currently sits at 10 percent.

The deficit for this year would surge to a record-breaking $1.56 trillion, topping last year’s unprecedented $1.41 trillion gap. The deficit would remain above $1 trillion in 2011.

Bond prices fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.66 percent from 3.60 percent late Friday.

The dollar mostly fell against other major currencies, while gold prices rose.

Crude oil rose 90 cents to $73.79 per barrel on the New York Mercantile Exchange.