By Anora Mahmudova and Carla Mozee, MarketWatch
MannKind leaps, Dean Foods slumps
NEW YORK (MarketWatch) -- Small-cap stocks ere leading the gains
on Wall Street Monday, as the main benchmarks bounced off their
recent low.
Sentiment was boosted by a calmer geopolitical scene as well as
dovish remarks from a top Federal Reserve official.
Easing of tensions in Ukraine and the Middle East prompted
investors to move into higher-risk stocks and away from haven
assets, pushing the yield on the 10-year Treasuries higher and gold
prices lower.
The Russell 2000 (RUT) rose 17 points, or 1.5%, to 1,148.09. The
index of small companies has outperformed the large-cap S&P 500
by 1.5 percentage points since the beginning of the month.
The S&P 500 (SPX) rose 11 points, or 0.6%, to 1,942.74, with
all 10 sectors in positive territory. Consumer staples, industrials
and technology stocks were leading the gains.
The Dow Jones Industrial Average (DJI) added 59 points, or 0.3%,
to 16,607.94. Among the blue-chip stocks, 27 of 30 Dow components
were trading higher.
The Nasdaq Composite (RIXF) gained of 40 points, or 0.9%, to
4,409.19.
Monday's rally is being described as a relief rally after a
selloff during the previous two weeks. The near-4% pullback on the
S&P 500 began as investors fretted the Fed might raise rates
sooner than expected in light of recent economic data that were
stronger than expected.
Jay Feuerstein, managing director of alternative strategies at
money manager Manning & Napier, says Wall Street is worrying
unnecessarily. "The Fed under Janet Yellen wants to see a much
stronger labor market improvement before raising rates and will
tolerate a rise in inflation to aid the economy," he said.
He said low rates and the improving economy make equities
attractive.
"When dividends are yielding higher than 10-year Treasurys,
equities will continue to outperform, and we expect a big rally in
the fourth quarter," he added.
Monday's economic calendar is empty. Meanwhile, Federal Reserve
Vice Chairman Stanley Fischer, in prepared comments for delivery at
a conference in Stockholm, said rebounds across advanced economies
have been disappointing. Also read: Fischer says Larry Summers
could be right.
In geopolitical news, there was relative calm in Ukraine and the
Middle East. On Saturday, rebel fighters in Ukraine said they were
ready for a cease-fire. Meanwhile, Palenstians and Israelis agreed
on a ceasefire in Gaza that was holding on Monday.
Stocks to watch
Shares of Mannkind (MNKD) surged 12% after the company reached a
licensing deal with Sanofi (SNY) to develop and sell inhaled
insulin drug Afreeza in the U.S.
Shares of Tesla Motors Inc.(TSLA) rallied 5.1% after an upgrade
to buy from Deutsche Bank. The bank also increased its price target
on the stock to $310, from $220 a share.
Shares of Dean Foods (DF) slumped 6.5% after the milk and food
company reported a wider-than-expected loss and withdrew its
full-year outlook.
Kinder Morgan (KMI) jumped 10% following plans to consolidate
its oil-and-gas pipeline empire into a single company in a $44
billion deal. (Read more about the day's notable movers here:
http://www.marketwatch.com/story/priceline-and-dean-foods-are-stocks-to-watch-monday-2014-08-08.)
In other markets, 10-year Treasury yields (10_YEAR) rose 2.5
basis points. Oil futures (CLU4) posted minor gains, but gold
futures (GCZ4) inched lower. European stocks rose following last
week's losses, and Asian shares advanced, with Japan's Nikkei
Average up 2.4%.
More must-reads from MarketWatch:
10 stocks with the biggest cuts in earnings estimates
Can J.C. Penney stay on the comeback trail?
Why small-cap stocks will likely feel the most pain
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