By Dan Strumpf
Stocks rallied, with the Dow Jones Industrial Average notching
an intraday record and shares of small companies and technology
stocks recovering some of their recent losses.
The Dow Jones Industrial Average climbed 103 points, or 0.6%, to
16687 in midday trading and earlier hit an intraday record of
16695. The rally comes one session after the blue-chip index
finished at an all-time closing high of 16583.34.
The S&P 500 added 15 points, or 0.8%, to 1894, clearing its
all-time closing high of 1890.91 reached in early April. The Nasdaq
Composite Index added 61 points, or 1.5%, to 4132.
Shares of smaller companies, meanwhile, staged a recovery from
their recent lows. Such companies have fallen out of favor in
recent months as investors have flocked to shares of larger, more
attractively-priced companies. The Russell 2000 index of small-cap
stocks recently advanced 23 points, or 2.1%, to 1130, though it
remains 6.5% off its recent high of 1208.65 reached in March.
News flow in the stock market was light Monday, with the bulk of
the earnings season over and little in the way of major economic
data due in the session. Steadily improving economic data and
better-than-expected earnings reports are helping to lift stocks,
say traders and investors.
"The fundamentals of the economy are actually improving," said
Brendan Connaughton, chief investment officer at ClearPath Capital
Partners, which manages about $250 million out of San Francisco.
"Inflation is not an issue. Valuations, although not attractive,
aren't in bubble territory or exceedingly expensive."
First-quarter earnings have largely beat estimates, though the
pace of earnings growth has slowed. Nearly 91% of companies in the
S&P 500 have reported earnings, according to FactSet, with
profits on track to grow 2.2% over last year. Analysts had expected
a drop in first-quarter profits of 1.1% as recently as late
March.
With no major economic data scheduled for Monday, investors were
looking ahead to data on retail sales, wholesale and retail
inflation, industrial production, consumer sentiment and on the
housing market later this week.
Many of the recently beaten-down technology and consumer
Internet stocks rebounded on Monday. Twitter rallied 5.2%, after
slumping 18% last week. Amazon gained 2.7% and Facebook rose
3.4%.
"Guys are sort of willing to take a bit more risk" and wade back
into beaten-up corners of the market, said Gordon Charlop, managing
director at Rosenblatt Securities. "We've gotten through earnings
season, which was steady if not remarkable and... the macro data
has been OK. You're getting to that spot where people are starting
to get a little more active."
Corporate news flow was light, but included more deal news.
Pinnacle Foods surged 14% after agreeing to be acquired by
Hillshire Brands for roughly $4.3 billion in cash and stock.
Hillshire's stock retreated 4.8%.
The yield on the 10-year Treasury note rose to 2.656% from
2.621% late Friday.
In Europe, the Stoxx Europe 600 climbed 0.7% to notch its
highest close since January 2008, as investors shrugged off the
latest developments in Ukraine.
Pro-Russian separatists in eastern Ukraine declared victory in
Sunday's secession referendum, ratcheting up tensions between the
West and Moscow. Russia said it would respect the vote and hopes
for a "civilized implementation" of the results. Meanwhile, the
West and Ukraine's government call the referendum illegitimate.
Germany's DAX 30 index gained 1.3%, France's CAC 40 tacked on
0.4% and the U.K.'s FTSE 100 rose 0.5%.
Crude-oil futures gained 0.9% to $100.83 a barrel, while gold
futures tacked on 0.3% to $1,291.10 an ounce. The dollar inched
higher against the euro and the yen.
Jim Paulsen, chief investment strategist at Wells Capital
Management, which oversees $357 billion, said a combination of
better-than-expected quarterly earnings and improving economic data
should pave the way for further gains in stocks in the near
term.
"By and large the data's been pretty good on the U.S. economy,"
Mr. Paulsen said. "There's a lot of momentum here. We were put off
by the weather but as that starts to dissipate, you're starting to
see [improvement] coming back through."
Asian markets were mixed. China's Shanghai Composite shot up
2.1% to a two-week high after the country's State Council said it
would move toward less regulated capital markets. Japan's Nikkei
Stock Average lost 0.4% after data showing a sharp drop in the
current-account surplus.
Write to Dan Strumpf at daniel.strumpf@wsj.com