By Kate Gibson
U.S. stocks surged Monday, with retailers rallying after a
report showed consumer spending at a record level and as investors
took heart from the latest merger activity, including UAL Corp.'s
$3.15 billion deal with Continental Airlines Inc.
The Dow Jones Industrial Average (DJI) ended up 143.22 points,
or 1.3%, at 11,151.83, its biggest one-day gain since mid-February
and nearly recouping Friday's 159-point slide.
All but one component traded higher, led by shares of
Caterpillar, Inc. (CAT), which gained 2.7%.
Alcoa Inc. (AA) was the sole decliner among the blue chips, with
shares of the aluminum producer down 2.1%.
The S&P 500 Index (SPX) climbed 15.57 points, or 1.3%, to
1,202.26.
Consumer discretionary and industrial shares led the gains, with
retail stocks such as Nordstrom Inc. (JWN), Starbucks Corp. (SBUX)
and Hasbro Inc. (HAS) advancing after the government estimated U.S.
consumer spending increased to a record high in March. .
Also supporting gains, energy stocks turned higher as oil topped
$86 barrel, its fourth-straight session gain, and as BP Plc (BP)
officials spoke to reporters on the spreading oil spill in the Gulf
of Mexico.
Materials, a sector that includes metals miners and producers
such as Alcoa, Freeport-McMoRan Copper & Gold Inc. (FCX) and
Cliffs Natural Resources Inc. (CLF), was the only laggard among the
S&P's 10 industry groups.
"The top groups continue to be the most cyclical and tied to the
economic recovery," said Paul Nolte, managing director at Dearborn
Partners.
Industrial stocks have led the market recovery from the
beginning, while "safer" groups like utilities have been weak,
Nolte added.
Merger Monday
The S&P 500's industrial sector gained after United Airline
parent UAL (UAUA) said it was acquiring Continental (CAL) in a
stock deal valued at about $3.2 billion. Neither airline is in the
S&P 500. .
"Markets tend to react favorably to these types of deals as they
figure business conditions must be improving and the consolidation
should create even stronger companies," said Andrew Fitzpatrick,
director of investments at Hinsdale Associates.
In a similar vein, Avis Budget Group Inc. (CAR) said it was
preparing to top a competitor's bid for Dollar Thrifty Automotive
Group Inc. (DTG). Avis' chief executive officer made the statement
one week after Hertz Global Holdings Inc. (HTZ) offered $1.17
billion, or $41 a share, for Dollar Thrifty.
The deals follow last week's announcement that Hewlett-Packard
Co. (HPQ) would acquire Palm Inc. (PALM).
The Nasdaq Composite Index (RIXF) added 37.55 points, or 1.5%,
to 2,498.74.
SanDisk Corp. (SNDK) shares rallied 9.2%, boosting tech stocks,
after Apple Inc. (AAPL) reported selling 1 million iPads in the
device's first month of release, pointing to strong demand for
makers of memory chips. Micron Technology Inc. (MU) rose 5.8%.
For every stock on the decline more than three were rising on
the New York Stock Exchange, where 1.18 billion shares traded
hands. Composite volume topped 5 billion.
Spill fallout
Energy stocks proved highly sensitive to the news flow around
the massive oil spill in the Gulf of Mexico.
Shares of Transocean Ltd. (RIG) edged up, reversing a slide that
came after BP PLC (BP) said equipment belonging to the rig owner
failed.
Other oil services companies also reversed higher as BP
officials held a briefing on the spill.
Cameron International Corp. (CAM) shares gained 3.3%, while
fellow S&P 500-member Halliburton Co. (HAL) rose 2.4%.
U.S. shares of BP were off 3.8%.
Nalco Holdings Co. (NLC) jumped 5.9% on reports its chemicals
would be used by BP to help clean up the slick, while Superior
Energy Services Inc. (SPN) climbed 1.2% after it said it was
contacted by BP to supply concrete covers that are placed over
spills.
Other companies with potential roles in the clean up also
gained, with shares of Clean Harbors Inc. (CLH) rising 5.6% and
Newpark Resources Inc. (NR) shares advancing 16%.
Crude-oil futures rose on the heels of data showing U.S.
manufacturing last month expanded at its most rapid pace since
2004, with the Institute for Supply Management report pointing to
increasing appetite for fuel in the U.S., the globe's largest
energy consumer.
The ISM's index jumped to 60.4% in April from 59.6% the prior
month.
The euro fell against the dollar to a fresh 12-month low as a
$146 billion aid package for Greece failed to restore investor
confidence, particularly about other European countries. The dollar
index (DXY) rose to 82.368, up 0.7%.
Greece's debt problems abated some after the European Union and
the International Monetary Fund reached agreement on a $145 billion
rescue plan.
