Monday Stocks Rise on Airline Merger

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.

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