US Stocks Rally After Factory Data; DJIA Hits Multiyear High
May 01 2012 - 2:29PM
Dow Jones News
A surprisingly strong reading on domestic manufacturing prompted
a rally in stocks and drove Dow industrials to their highest level
in more than four years.
The Dow Jones Industrial Average rose 101 points, or 0.8%, to
13318 in Tuesday-afternoon trading, reaching levels not seen since
Dec. 31, 2007.
The Standard Poor's 500-stock index tacked on 14 points, or 1%,
to 1411 and the Nasdaq Composite gained 24 points, or 0.8%, to
3070.
After a flat open, stocks jumped following a report that showed
the U.S. manufacturing sector's expansion rose in April to its
highest level in nearly a year. The Institute of Supply
Management's purchasing managers index reading for April topped
forecasts and rose from the month earlier.
"You needed a second leg for [momentum in stocks] not to
decelerate. The popular press was saying it's time to sell your
stocks, that the fun has stopped. Then May kicks off, and you've
got a piece of very good news," said Mark Lehmann, director of
equities at JMP Securities in San Francisco.
Energy stocks led as all 10 of the S&P 500's sectors rose.
Chesapeake Energy jumped 7.8% after the company's board and Chief
Executive Aubrey McClendon agreed to separate the roles of CEO and
chairman. The company also announced the early termination of a
participation program that gave McClendon stakes in thousands of
oil and gas wells. McClendon will remain as CEO, but he will
relinquish his role as chairman.
Bank of America rose 3.1% and was the Dow's biggest gainer after
The Wall Street Journal reported it has plans to cut about 2,000
jobs in its investment banking, commercial banking and non-U.S.
wealth-management units, citing people familiar with the
matter.
Sears Holdings jumped 18% after the company said it expects to
announce an improvement in operations at its namesake stores when
the retailer posts first-quarter results next month.
Pfizer was flat after reporting its first-quarter earnings fell
19% in the first full quarter since its blockbuster cholesterol
drug, Lipitor, lost market exclusivity last year. The company
lowered its full-year earnings outlook to adjust for the pending
sale of its nutrition unit.
Ford Motor and General Motors reported that U.S. sales fell,
though both stocks gained ground with the broader market. Ford rose
0.3% reported that new-vehicle sales fell 5% in April from the
prior year, while GM, up 1.6%, reported an 8.2% sales decline, but
raised its full-year forecast for light-vehicle sales. Meanwhile,
Chrysler Group's U.S. auto sales rose 20% in April as the auto
maker saw particular strength in its namesake brand. Results from
the Detroit auto maker, which is majority owned by Italy's Fiat,
beat expectations.
In Europe, the Stoxx Europe 600 rose 0.4%, its fifth advance in
six sessions. The FTSE 100 added 1.3% despite a
weaker-than-expected reading on the U.K.'s manufacturing
sector.
Asian markets were mixed. Australia's S&P/ASX 200 rallied
0.8% to close at a nine-month high after the Reserve Bank of
Australia cut its key lending rate 0.50 percentage point to 3.75%.
Japan's Nikkei Stock Average slumped 1.8%.
Crude-oil futures rose 1.3% to $106.29 a barrel, while gold
futures ticked down 0.1% to $1,662 a troy ounce. The U.S. dollar
rose against the euro and the yen. The yield on benchmark 10-year
U.S. Treasury notes rose to 1.954%.
In other corporate news, P.F. Chang's China Bistro surged 30%
after it agreed to be acquired by a private equity firm for a 30%
premium over Monday's closing price. Word of the deal came as the
restaurant operator also reported its first-quarter earnings fell
more than 40% amid continued struggles in its massive turnaround
effort.
Avon Products skidded 7.9% and was the weakest stock on the
S&P 500 after reporting first-quarter earnings that were below
expectations. Costs rose and operating margins declined.
Archer Daniels Midland rose 6.3% after the company's fiscal
third-quarter earnings beat forecasts, but fell 31% amid an ethanol
supply glut and weak European oilseed processing results. The
company said reported stabilization in its global grain-trading
business, and improvement in its North American oilseed processing
business.
Agco surged 7.1% after the agricultural-equipment maker's
first-quarter earnings climbed 50% on acquisitions and sales growth
in Europe and North America.
WMS Industries fell 4.1% after the maker of slot machines and
lottery terminals reported fiscal third-quarter results that missed
analyst forecasts, with new unit sales revenue declining from year
ago levels.
Office Depot slipped 3.6% after North American same-store sales
fell in the first quarter, but the company swung to a first-quarter
profit thanks to a large settlement.
Imperial Sugar shot up 58% after Louis Dreyfus Commodities
agreed to buy the company in a cash deal that values the Texas
sugar processor at about $78 million.
-By Chris Dieterich, Dow Jones Newswires; 212-416-2611;
christopher.dieterich@dowjones.com
P.F.Changs China Bistro, Inc. (MM) (NASDAQ:PFCB)
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