Stocks Gain as Attack Fears Ebb
Mon Aug 2, 2004
NEW YORK (Reuters) - U.S. stocks rose on Monday as fears about possible attacks on U.S. financial institutions receded and strong earnings from consumer products maker Procter & Gamble Co. (PG.N: Quote, Profile, Research) helped push up the blue-chip Dow.
The warnings about the possible attacks depressed stocks earlier in the session but as the day progressed, investors shrugged off some of their fears.
"It opened lower because some people took to heart what was said," said Stanley Nabi, vice chairman at Silvercrest Asset Management Group. "Then once the moderate selling as a result of this kind of psychological turning point was over, the market started gathering a little bit of momentum."
Citigroup Inc. (C.N: Quote, Profile, Research) , Prudential Financial Inc. (PRU.N: Quote, Profile, Research) , the International Monetary Fund, the New York Stock Exchange and the World Bank were included in a "high" level threat alert by the Department of Homeland Security, which said the attacks on these landmark financial buildings in New York City, Newark, New Jersey, and Washington, D.C., could come from al Qaeda.
The warnings drove U.S. crude oil prices to a record high of $43.94 a barrel earlier in the day before prices eased a bit to settle Monday at $43.82, up 2 cents. Higher oil prices typically cut into corporate profits, as crude is a vital component of transport and manufacturing.
Technology stocks ended higher, but the gains were held in check by a drop in education stocks.
The Dow Jones industrial average rose 39.45 points, or 0.39 percent, to 10,179.16. The Standard & Poor's 500 Index gained 4.90 points, or 0.44 percent, to 1,106.62. The technology-laced Nasdaq Composite Index added 4.73 points, or 0.25 percent, to finish at 1,892.09, based on the latest data.
Trading was moderate, with 1.28 billion shares changing hands on the New York Stock Exchange, below the 1.4 billion daily average for last year. About 1.53 billion shares were traded on Nasdaq, below the 1.69 billion daily average last year.
Advancers outnumbered decliners on the NYSE by 20 to 13, while decliners outnumbered advancers 9 to 7 on the Nasdaq.
Dow component Procter & Gamble, a maker of Tide laundry detergent and dozens of other household and personal products, reported a better-than-expected quarterly profit. The company's stock rose $1.19, or 2.3 percent, to $53.34 on the New York Stock Exchange and was the Dow's biggest percentage gainer.
Wireless technology provider Qualcomm Inc. (QCOM.O: Quote, Profile, Research) helped boost the Nasdaq after Banc of America Securities upgraded its rating on the stock to "buy" from "neutral."
Qualcomm gained $2.85, or 4.1 percent, to $72.06.
Corinthian Colleges plunged $8.43, or 45 percent, to $10.29 on the Nasdaq.
Apollo Group Inc. (APOL.O: Quote, Profile, Research) fell $6.22 or 7.4 percent, to $77.33 on the Nasdaq. Career Education Group (CECO.O: Quote, Profile, Research) tumbled $4.21, or 12.5 percent, to $29.60 on the Nasdaq.
A government report showing manufacturing growth added some bright spots to an otherwise dark morning.
U.S. manufacturing expanded further in July, fueling more hiring, but outlays for U.S. construction fell unexpectedly in June to hint at a slowing of the housing boom, reports released on Monday showed.
The Institute for Supply Management's national factory index rose to 62.0 in July from 61.1 in June. But the ISM's prices paid index eased to 77.0 from 81.0 as commodity prices fell back from recent highs.
"The ISM survey was, as expected, strong but the prices paid part of it was up less dramatically than people expected and that takes some of the edge off of the inflation fears," said Milton Ezrati, senior economic strategist at Lord Abbett & Co. "It not only relieved that fear in the market to an extent, but it also relieves the fear that the Fed is going to have to tighten (interest rates) too much. And that has been something that has worried the market for some time now."
In another report, the government said outlays for U.S. construction fell unexpectedly in June as spending on housing dropped for the first time in 16 months.
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