Star-Bulletin news services
Optimism lifts stocks
NEW YORK >> The Nasdaq composite index posted its best finish in 10 months today as buyers grew increasingly confident of a rebounding economy. Airline stocks surged after Merrill Lynch said the worst of the industry's troubles seemed to be over.
Analysts said investors were unfazed by a jump in the unemployment rate and pleased by a jump in factory orders, giving the Nasdaq and Standard & Poor's 500 index and Russell their third straight winning week. The Dow Jones industrials, meanwhile, climbed 128 points.
"Optimism is certainly returning to the market," said Richard Nash, chief market strategist at Victory Capital Management. "Most folks have been willing to ignore the subpar economic data because most of it has been backward-looking. They know the March-April period was affected by the war."
Advancing issues outnumbered decliners more than 3 to 1 on the New York Stock Exchange. Volume was moderate.
The Nasdaq gained 30.32, or 2.1 percent, to 1,502.88, the highest level seen since June 18, 2002, when it closed at 1,542.96. The S&P rose 13.78, or 1.5 percent, to 930.08, the best level since Jan. 14. The Dow closed up 128.43, or 1.5 percent, at 8,582.68, following a two-day loss of 48.74 points. It was the highest level since Jan. 17, when the blue chips finished at 8,586.74.
The Russell 2000 index rose 8.84, or 2.2 percent, to 407.67.
For the week, the four gauges finished higher, with the Dow up 3.3 percent, the Nasdaq higher 4.8 percent, the S&P up 3.5 percent and the Russell gaining 4.9percent. The Dow rebounded from a loss last week.
The price of the Treasury's 10-year note was down 5/8 point, while its yield rose to 3.92 percent from 3.84 percent yesterday. Two-year Treasury notes were down 5/32 point and yielded 1.55 percent, up from 1.47 percent yesterday.
The Labor Department reported today that the nation's unemployment rate rose to 6 percent in April. Last month's jobless rate was up two-tenths of a percentage point from March, with payrolls falling by 48,000. April's reading matched economists' estimates.
But the Commerce Department said orders to U.S. factories rose 2.2 percent to $329.96 billion in March, following a revised 1 percent fall in February. The gain was larger than analysts' expectations.
"It's a curious day because I thought the jobs report came out mixed at best," said John C. Forelli, portfolio manager for Independence Investments in Boston. "But investors are willing to extend their timeline for waiting for an economic recovery." Still, he added, "in general, we've been in a trading range for the market for pretty close to a year now. We're at the top end of that range and to have a breakthrough there, I think we're going to need some clear evidence the economy is improving."
Airline stocks were winners after Merrill Lynch upgraded the sector, saying that while the industry is likely to again lose money this year, it has seen the worst of its problems. Continental surged $1.94 to $11.80, while Delta climbed $1.75 to $14.75 and American Airlines parent AMR rose 66 cents to $5.47.
Overseas, Japan's Nikkei stock average finished 0.6 percent higher. In Europe, France's CAC-40 rose 0.3 percent, Britain's FTSE 100 gained 1.9 percent and Germany's DAX index advanced 1.5 percent.
STOCK QUOTES/CHARTS/DATA
