Dow now at 11,151, up 142 points.
NEW YORK (AP) — Stocks rose Monday after improved economic
reports and a merger between United and Continental Airlines raised
expectations about a recovery.
The Dow Jones industrial average rose about 95 points in midday
trading. Broader indexes also climbed.
United is acquiring Continental in a stock deal worth about $3
billion. Corporate dealmaking is seen as another sign the economy
is improving and companies are comfortable making commitments to
expand their businesses.
Reports on manufacturing, construction spending and consumer
spending boosted expectations that the economy is bouncing
back.
The Institute for Supply Management said that U.S. manufacturing
activity expanded at the fastest pace in nearly six years. The
trade group’s manufacturing index rose to 60.4 in April from 59.6
in March. Economists expected a reading of 60. Manufacturing has
shown consistent signs of a rebound in recent months as production
picks back up.
The Commerce Department said construction activity rose 0.2 percent
in March, the first gain since October. Economists expected a drop.
However, the figures for February were revised lower.
The agency also reported that personal spending rose 0.6 percent in
March, the biggest jump in five months. Consumer spending accounts
for the bulk of economic activity in the country, so growth is a
welcome sign of recovery.
The report also found that personal income rose just 0.3 percent,
renewing concerns that growth in spending could slow if wage growth
doesn’t pick up further. Both the income and spending figures
matched forecasts from economists polled by Thomson Reuters.
Analysts said the combination of United and Continental is a sign
of confidence that the economy is improving.
“The merger in the airlines is great. As you begin to see mergers
that means there is value out there,” said Anthony Conroy, managing
director and head trader for BNY ConvergEx Group.
Stocks are rebounding from a disappointing end to April. The market
tumbled Friday following mixed economic reports and concerns about
a criminal investigation of Goldman Sachs. The government reported
the nation’s economy grew at a slower pace in the first quarter
than had been forecast and a report on consumer sentiment showed a
drop in confidence in April. The Dow fell 158 points and ended
eight straight weeks of gains.
In midday trading, the Dow rose 90.01, or 0.8 percent, to
11,098.62. The broader Standard & Poor’s 500 index rose 9.24, or
0.8 percent, to 1,195.93, and the Nasdaq composite index rose
27.20, or 1.1 percent, to 2,488.39.
Bond prices fell after demand for safer investments eased. The
yield on the benchmark 10-year Treasury note, which moves opposite
its price, rose to 3.71 percent from 3.66 percent late Friday.
The dollar rose, while gold increased.
Crude oil rose 50 cents to $86.65 per barrel on the New York
Mercantile Exchange.
Asian markets fell after China forced banks to increase their
reserves as part of the country’s efforts to curb inflation and
avoid speculative real estate bubbles.
European markets rebounded from an early drop that came after the
European Union and the International Monetary Fund agreed to
provide Greece with $145 billion over the next three years to help
it with its ongoing debt problems. European shares turned higher
after U.S. stocks rose.
Germany, the EU’s biggest member, still has not approved its share
of the bailout for Greece. Germany is expected to provide Greece
with $11.14 billion in the first year of the three-year bailout
package.
Investors are still skittish about Greece’s ability to get its debt
problems under control and the potential for other European nations
to face similar issues. The euro is again falling sharply against
the dollar, hovering near its lowest levels of the past year.
Shares of Goldman Sachs rose $4.29, or 3 percent, to $149.49 after
billionaire investor Warren Buffett said over the weekend that he
doesn’t think the investment bank committed fraud. The SEC has
accused the company of wrongdoing in a deal involving mortgage
securities deals it set up.
United rose 54 cents, or 2.5 percent, to $22.14, while Continental
climbed 44 cents, or 2 percent, to $22.79.
Two stocks rose for every one that fell on the New York Stock
Exchange, where volume came to 424 million shares compared with 515
million traded at the same point Friday.
The Russell 2000 index of smaller companies rose 8.74, or 1.2
percent, to 725.34.
Overseas, Germany’s DAX index rose 0.5 percent, and France’s CAC-40
rose 0.3 percent. Britain’s FTSE 100 was closed for a bank holiday.
Hong Kong’s Hang Seng fell 1.4 percent, while Japan’s Nikkei stock
average was closed for a holiday.
