Stock prices rallied Monday as the stock market snapped a losing streak despite a sell-off in stock of Seattle-based Boeing Co.
Volume was moderate as the market evaluated the first of a barrage of economic numbers from the government. Slightly more than 406 million shares changed hands on the New York Stock Exchange.
The Dow Jones industrial average rose 44.15 points, closing at 6783.02. In the broader market, advancing issues outnumbered decliners by roughly 13-to-11 on the New York Stock Exchange.
The Dow wasn’t alone in its climb. The Nasdaq composite index rose 7.74 points, to 1217.03.
The Standard & Poor’s composite index of 500 stocks rose 7.59 points, to 772.96. The American Stock Exchange index, however, was off 1.63, to 541.20.
Monday’s rally was confined mainly to large-cap stocks. The Russell 2000 Index of small-cap stocks, which has been sliding since January, closed essentially flat at 336.10.
But Boeing, one of the 30 Dow industrials stocks, skidded after reporting earnings that missed Wall Street expectations by a wide margin. Boeing’s stock closed at $95.37, down $6.62 on the New York exchange. The company warned that earnings will continue to be under pressure in the near term due to tight margins on newer aircraft now coming off assembly lines.
Bond prices steadied after the Commerce Department reported that sales of new homes fell 2.5 percent in March after rising 1.1 percent in February. Sales fell 16.1 percent in the Northeast, dropped 10.5 percent in the South, rose 17.7 percent in the West and edged up 2.5 percent in the Midwest.
The report prompted some interest-sensitive stocks to rebound as speculators started betting that the Federal Open Market Committee will not raise interest rates when it meets May 20. The committee raised short-term rates to 5.5 percent from 5.25 percent last month.
Among those stocks rebounding Monday were First Chicago NBD Corp., which closed at $53.87, up $1.12; Allstate Corp., which closed at $62.62, up $1.50, and Citicorp, which closed at $107.25, up $3.87.
But even if the week’s economic numbers are weak, many analysts expect the Fed will increase rates because of its preference in raising or lowering in several steps rather than a single step.
While Commerce reported on housing Monday, durable goods orders and the employment cost index, a closely watched barometer of wage inflation, will be among the topics of the day Tuesday. The Conference Board will also release its consumer confidence index for April.
In a possible prelude to the confidence index, however, the Cahners Business Confidence Index fell 1.3 points, to 66.4 from 67.7, following four consecutive months of rising business confidence.
“When the Fed increased interest rates, Wall Street went into a 10-day free fall,” said Cahners economist Daryl Delano. “It was inevitable that manufacturers would react, along with the rest of the business community.
“Despite the decline, the index is still at a healthy level. However, there appear to conflicting views on just what impact higher interest will have.”
Plans to expand manufacturing activity were sharply curtailed during April, suggesting that the threat of future rate hikes could have an effect upon the continued economic expansion.
Three regions of the country posted declines over the previous month; only manufacturers in the Northeast anticipate improved growth in the second quarter. Led by new product introductions and capital spending increases, the Northeast rose to 66.8, the highest level since last October. On the other hand, the Midwest confidence fell to 66.5.
Options trading: The Chicago Board Options Exchange on Monday completed the transfer of the NYSE options trading program.
With the additions of the New York options, the CBOE now lists options on 1,077 stocks, 37 stock indices and interest rates.
The new trading facility is located one floor below the main trading floor. The facility will serve the New York program for seven years, while the CBOE retains a portion of open space on its main floor for continued growth.
Local stocks: Shares of Sears, Roebuck and Co. slipped again Monday as the fears about the company’s credit practices continued. The company’s stock closed $46.50, down 75 cents.
Market Facts Corp., an international market research and information company, announced a 2-for-1 stock split on May 27 to shareholders of record on May 12.
Unicom Corp. shares gained $1.25, to $21.37, despite news that the operator of Sears Tower filed a complaint with the Illinois Commerce Commission to force Unicom’s Commonwealth Edison Co. subsidiary to allow a privately owned electric generating system to be installed.
Tower Leasing Inc., which operates the tallest building in North America, and QST, a unit of Cilcorp Inc., said Commonwealth refused to connect with the generating system. The companies estimate that the generating system will provide $2 million in annual energy savings.
WMX Technologies Inc. shares closed at $29.37, up $1.25 on the NYSE. The Oak Brook company said Peter Huizenga, a director and founder of the company, is selling a portion of the WMX shares he owns in a company stock buyback. The tender offer was pegged at a price between $30 and $35 a share.
Huizenga, who will retire as a director when his terms ends May 9, owns about 8 million shares, or about 1.7 percent of the company’s outstanding stock.
