NEW YORK - US stocks rose on Monday in a light and short pre-holiday session as mild economic data increased optimism about the interest-rate outlook and positive news about Citigroup Inc. gave investors a reason to buy bank shares.
A weaker-than-expected ISM manufacturing index for June and a drop in
May construction spending pointed to slower economic growth.
The ISM manufacturing prices-paid index, an inflation gauge, also dipped. Analysts said that bolstered the perceptions from last week that the Federal Reserve's interest-rate hikes could be ending soon.
"It's basically people looking for the Goldilocks type economic numbers - not too strong, not too soft - and that's what we got today, and so I think there are reasons to be optimistic," said Todd Clark, director of stock trading at Nollenberger Capital Partners in San Francisco.
Citigroup's stock climbed 1.5 per cent. The gain followed news over the weekend in Barron's, the financial weekly, that Citigroup's Chairman and Chief Executive Charles Prince has rejected the idea of breaking up the financial services giant. Shares of JPMorgan Chase & Co. Inc. jumped nearly 3 per cent.
The Dow Jones industrial average gained 77.80 points, or 0.70 per cent, to end at 11,228.02. The Standard & Poor's 500 Index added 9.99 points, or 0.79 per cent, to finish at 1,280.19. The Nasdaq Composite Index rose 18.34 points, or 0.84 per cent, to close at 2,190.43.
Only five of the Dow's 30 components finished lower, including GM.
The New York Stock Exchange and the Nasdaq closed at 1700 GMT (5am NZT) for the July 4 Independence Day holiday. On Wednesday, trading will resume at regular hours.
Monday's abbreviated session marked the first trading day of July and the third quarter, with only about 765.4 million shares changing hands on the New York Stock Exchange - well below last year's daily average of 1.61 billion.
Historically, the first trading day of July has been a strong one for stocks, with the Dow rising in 13 of the last 16 of those sessions, the Stock Trader's Almanac says.
After the closing bell, General Motors Corp. reported its US sales fell 25.9 per cent in June. In extended-hours trading on the Inet electronic brokerage network, GM's shares rose to US$29.60 - up about 0.7 per cent from its NYSE close.
During the regular session, GM's stock fell 1.3 per cent, or 38 cents, to US$29.41 on the NYSE and helped drag on the Dow. Earlier, the stock hit a session high of US$30.39 after news that the board of French automaker Renault is set to discuss opening its partnership with Nissan to include US-based GM, the world's largest automaker.
Ford Motor Co. and DaimlerChrysler AG also reported sharply lower June sales, partly due to high petrol prices. In contrast, US sales for Japan's Toyota Motor Corp. jumped 14 per cent in June. Ford shares fell 3.2 per cent, or 22 cents, to US$6.71.
Last week, the Federal Reserve raised its benchmark federal funds rate to a five-year high of 5.25 per cent, as expected, but toned down warnings about inflation and the possible need for further increases. But fed fund futures still show a 68 per cent chance of a rate hike in August.
"There's still a little bit of optimism surrounding last week's disclosure by the Fed that they're going to take a wait-and-see attitude as far as hiking rates, so that provided a bit of a positive backdrop for the market," Clark said.
Citigroup's shares gained 1.5 per cent, or 73 cents, to US$48.97 on the NYSE, while JPMorgan shares climbed 2.9 per cent, or US$1.21, to US$42.87, and Bank of America Corp.'s stock advanced 1.5 per cent, or 71 cents, to US$48.81.
JPMorgan ranked as the Dow's second-biggest gainer. An S&P index of financial services stocks rose 1.1 per cent.
On the Nasdaq, Summit Bancshares Inc. surged 28.3 per cent, or US$6.01, to US$27.22, after Cullen/Frost Bankers Inc. said it has agreed to buy Summit Bancshares. Cullen Frost shares fell 2.8 per cent, or US$1.60, to US$55.70.
Shares of Alcoa Inc., the world's largest aluminum producer, rose 2.3 per cent, or 73 cents, to US$33.09, after analysts said the company is ripe for a takeover.
Volume was light, with many market participants taking a long weekend before the July 4th holiday on Tuesday. On Nasdaq, about 774 million shares traded, sharply below last year's daily average of 1.80 billion.
Advancing stocks outnumbered declining ones by a ratio of about 3 to 1 on the NYSE and by 17 to 11 on Nasdaq.
- REUTERS
<i>US stocks:</i> Shares climb during short session
Caroline Valetkevitch
4 mins to read
NEW YORK - US stocks rose on Monday in a light and short pre-holiday session as mild economic data increased optimism about the interest-rate outlook and positive news about Citigroup Inc. gave investors a reason to buy bank shares.
A weaker-than-expected ISM manufacturing index for June and a drop in
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