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Jump in factory orders
prompts market surge
NEW YORK >> Inspired by a bigger-than-expected rise in factory orders, investors sent stocks sharply higher yesterday, taking advantage of lower prices after last week's declines and extending the market's advance to a second day. The Dow Jones industrials surged 101 points.
Surprisingly strong sales at Starbucks, brokerage house upgrades and a legal victory for Merrill Lynch contributed to the gains.
"The market continues to look forward to better economic news in the second half of the year," said Lynn Reaser, chief economist and senior market strategist, Banc of America Capital Management. "(Investors) are beginning to believe the recovery story and want to be invested to profit from it."
The Dow closed up 101.89, or 1.1 percent, at 9,142.84, having advanced 55.51 Tuesday in late-day bargain hunting.
The broader market also rallied. The Nasdaq composite index rose 38.60, or 2.4 percent, to 1,678.73, having gained 17.33 the previous session. The Standard & Poor's 500 index advanced 11.43, or 1.2 percent, to 993.75, following Tuesday's win of 7.82.
Volume was light due to many traders being absent ahead of the Independence Day holiday. Trading will end early tomorrow and the market will be closed Friday.
Advancing issues outnumbered decliners slightly 3 to 1 on the New York Stock Exchange. Volume was a light 1.45 billion shares, below Tuesday's already thin 1.59 billion.
The Russell 2000 index, which tracks smaller company stocks, rose 9.72, or 2.2 percent, to 458.89. The NYSE composite index gained 64.07 to 5,590.55. The American Stock Exchange composite index rose 6.20 to 977.01.
Wall Street welcomed news from the Commerce Department that orders to U.S. factories rose by 0.4 percent in May, the best showing in two months and stronger than the flat reading economists predicted.
But whether the market can hold its gains depends on economic news continuing to be strong and on the second-quarter earnings reports that companies begin releasing later this month. Investors are particularly anxious to hear what companies say about the third and fourth quarters, having placed their bets on Wall Street for a second-half earnings and economic recovery.
"There is always something the market is looking ahead to. Tomorrow is the next big road block with (June) unemployment data coming out," said Michael Sheldon, chief market strategist at Spencer Clarke LLC.
Among yesterday's winners, Starbucks advanced $1.64 to $26.97 after the company announced June sales exceeded Wall Street's expectations.
Merrill Lynch advanced 44 cents to $48.64, the day after a federal judge threw out lawsuits by investors blaming it for the money they lost after the Internet bubble burst.
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