By Kristina Peterson
U.S. stocks pared earlier gains Friday as investors tread
lightly ahead of U.S. elections Tuesday and the Federal Reserve
meeting which concludes Wednesday.
The Dow Jones Industrial Average (DJI) rose 52 points, or 0.5%,
to 11171. Technology companies gained after the Semiconductor
Industry Association said global chip sales rose 2.9% in September
from a month earlier. Intel (INTC) climbed 1.8%, while Microsoft
(MSFT) gained 1.2% and Hewlett-Packard (HPQ) rose 1%.
Traders' focus is locked on events later this week, including
the results of Tuesday's midterm elections and Wednesday's
conclusion of a meeting of the U.S. Federal Reserve's policy-making
committee. The stock market has rallied since early September and
on Friday the Standard & Poor's 500-share (SPX) index wrapped
up its best October performance since 2003, largely on expectations
that the Fed will resume purchasing bonds in order to stimulate the
economy.
Still, the market moved higher Monday after a round of
better-than-expected economic reports on a day investors expected
would show little movement ahead of such significant events.
The market's climb is likely a response to encouraging Chinese
manufacturing data, a stronger-than-expected reading of October
manufacturing activity from the Institute of Supply Management and
an unexpected rise in construction spending. "Generally with an
election tomorrow you'd have almost nothing happening in the market
today," said Jennifer Ellison, principal at Bingham, Osborn &
Scarborough. "Regardless of who wins tomorrow or what the Fed does,
if we don't have corporate earnings growth and don't have people
going back to work, the market's not going to continue going up at
the pace it has been," she said.
Others are worrying that the high level of anticipation going
into the week's events could lead to disappointment if the size or
scope of the Fed's expected announcement fails to match the
market's expectations.
While an immediate selloff is possible, "any kind of correction
and or pause is going to be short and shallow," said Jeff Saut,
chief investment strategist at Raymond James. "There are still
going to be very good earnings comparisons coming up."
The Nasdaq Composite (RIXF) gained 0.2% to 2512. The S&P 500
rose 0.5% to 1190, led by its energy and financial sectors.
Boosting energy stocks, Baker Hughes (BHI) surged 4.8% after its
third-quarter earnings soared as the oilfield-services company
benefited from a rebound in North America, a seasonal recovery in
Canada and the April acquisition of BJ Services. Cabot Oil &
Gas (COG) rose 5.5%, while Range Resources gained 5.1%.
Adding to hopes for global economic growth, two measures of
Chinese manufacturing data unexpectedly increased. A set of data
from HSBC showed one of the biggest month-on-month increases since
the index was launched in 2004.
In corporate news, Ambac Financial Group (ABK) tumbled 38% after
the bond insurer warned that its board declined to make an interest
payment and said it is negotiating plans for a prepackaged
bankruptcy proceeding with senior debtholders. If it can't reach an
agreement for such a plan, it plans to file for Chapter 11
bankruptcy protection by the end of the year.
EXCO Resources (XCO) jumped 31% after Chairman and Chief
Executive Douglas Miller offered to buy the company, valuing it at
about $4.4 billion. The company's board said it intends to
establish a special committee of independent directors to consider
the proposal.
Wilmington Trust (WL) sank 42% after it announced a merger with
M&T Bank for a stock deal valued at about $351 million. The
Delaware banker also reported its third-quarter loss widened
sharply as its loan-loss provisions soared and as its mounting
losses required it to establish a "significant" tax-valuation
allowance. Shares of M&T Bank (MTB) gained 3.5%.
Among stocks reporting earnings, Corning (GLW) rose 1.2% after
its third-quarter profit jumped 22%, boosted by higher sales and
margins, though its results just missed analysts' expectations.
Corning, one of the leading providers of glass used in LCD screens
for electronics, said it expects glass prices to fall slightly in
the fourth quarter due to ample supply.
Humana (HUM) firmed 0.8% after its third-quarter profit rose 30%
as revenue rose on increases in enrollment. Humana, one of the
nation's biggest providers of privately-run Medicare Advantage
health plans for seniors, also lifted its outlook for the year.
The U.S. dollar strengthened against both the euro and the yen.
The euro was recently trading at $1.3882, down from $1.3947 late
Friday in New York.
Demand for Treasurys slipped, pushing the 10-year note's yield
(UST10Y) up to 2.64%. Crude-oil prices rose above $83 a barrel,
while gold futures declined.
Crude-oil prices rose above $83 a barrel, while gold futures
declined.