Dow Rallies 1% on GM, Ford, McDonald's

Elena
13 Sep, 2007
New York City

U.S. market averages rallied, with the Dow Industrial posting triple-digit gains. The blue chips were led higher by more than 6% increase in the shares of both General Motors and McDonald''s. The car maker advanced on a broker upgrade and progress in talks between automakers and workers over health care costs. Macdonald''s shares rose after the fast-food retailer lifted its dividend by 50%.

[R]11:30AM U.S. market averages rallied. Financial stocks gained.[/R]

U.S. market averages rallied, with the Dow Industrial posting triple-digit gains. Stocks advanced, as upbeat corporate news and growing optimism of interest-rate cuts offset surging oil prices and record-low U.S. dollar. Investors also cheered news of lower-than-antricipated increase in the initial jobless claims last week.

The blue chips were led higher by more than 6% increase in the shares of both General Motors ((GM)) and McDonald's. The car maker advanced on a broker upgrade and progress in talks between automakers and workers over health care costs. Fellow member Ford ((F)) climbed 3.3% on the news. Macdonald's ((MCD)) shares rose after the fast-food retailer lifted its dividend by 50%.

By sectors, steel and oil stocks moved significantly higher. Alcoa ((AA)) climbed 2.9% and Exxon Mobil ((XOM)) rose 1.3%, helping to push the Dow higher. Financial stocks gained, driven by interest-rate reduction optmism. Merrill Lynch ((MER)) rose 3.2%, Bear Stearns ((BSC)) climbed 4%, and Goldman Sachs ((GS)) added 2.8%. Pharmaceutical stocks continued their recent upward move, with Merck & Co. ((MRK)) rising 1.1% on broker upgrade of its stock. Technology stocks and small-capitalization issues showed weakness.

Light, sweet crude fell 66 cents to $79.25 a barrel. The dollar gained some ground vs. the euro which recently traded at $1.3874.In late morning trading, the Dow rose 144.45, or 1.09%, to 13,436.10. The Standard & Poor's 500 index rose 14.48, or 0.98%, to 1,486.04, and the Nasdaq composite index rose 13.08, or 0.50%, to 2,605.15. Bond prices fell. The yield on the 10-year Treasury note, which moves opposite its price, rose to 4.46% from 4.41% late Wednesday.


[R]09:45AM Wall Street opened higher. The Dow rallied, boosted by GM and McDonald’s.[/R]

Wall Street rallied at opening Thursday, with Dow Jones surging 100 points on lower-than-expected increase in weekly jobless claims and upbeat corporate news from McDonald''s and General Motors. Although the market grew more optimistic about interest-rate cuts, many investors refrained from making big moves before Tuesday''s meeting of the Fed Reserve.

McDonald''s ((MCD)), fast-food retailer, rose 4.6% after it lifted its dividend to shareholders by 50%, while car maker General Motors ((GM)) jumped 6% after Citigroup raised its rating on the stock. Reportedly, the UAW may agree to establish a union-controlled trust fund for employee health care costs. Shares of rival Ford ((F)) rose 2%.

Among other stocks in the spotlight, Target Corp. ((TGT)) rose 1.9% on speculations of a possible sale of $7 billion in credit-card receivables. The Nasdaq was given a boost by software maker Microsoft ((MSFT)) which rose 0.5% after lifting its quarterly dividend by a penny, to 11 cents a share.

Tech stocks dropped sharply, with disk drive and networking stocks posting the largest losses. Alcatel-Lucent ((ALU)) declined 10.2% after it lowered its full-year revenue growth guidance, blaming the change in capital spending by wireless customers in North America.

In the commodities market, crude oil prices fell 37 cents to $79.54. Gold prices fell as the U.S. dollar reversed from an all-time low vs. the euro on Thursday. In early trading, the Dow rose 107.79, or 0.81%, to 13,399.44. The Standard & Poor''s 500 index rose 8.59, or 0.58%, to 1,480.15, and the Nasdaq composite index rose 5.53, or 0.21%, to 2,597.60. Bond prices fell. The yield on the 10-year Treasury note rose to 4.44% from 4.41% late Wednesday.


[R]09:00AM U.S. stock futures advanced on better-than-expected jobs data.[/R]

U.S. stock futures were pointing to recovery Thursday on better-than-anticipated jobs data. The Labor Department said that initial jobless claims rose by 4,000 last week to 319,000, less than the 325,000 claims analysts expected. The report also stated low unemployment rate of 4.6%. On the one hand, the unexpected drop in employment raised some concerns about the health of the economy, but on the other, it built on optimism that the Fed Reserve will cut interest rates at its next meeting on Sept. 18.

Among pre-market highlights, McDonald''s ((MCD)) rose 2% after it said it would increase its dividend by 50%. Microsoft ((MSFT)) gained 0.7% after it raised its quarterly dividend by a penny to 11 cents a share.

Dow member General Motors ((GM)) jumped 5.5% in pre-open trade on news that the car maker is planning a wage syste that would allow it to pay newly-hired workers less than veterans. Reportedly, the UAW are willing to create a union-controlled health-care trust fund.

The retail sector received a boost from Target Corp. ((TGT)) which rose 2% after saying it considers selling its $7 billion in credit-card receivables. Among companies driven by analyst comments, Merck & Co. ((MRK)) rose 1% in pre-open trade, following an upgrade to buy from neutral at Banc of America Securities.

In other corporate news, telecom equipment maker, Alcatel-Lucent (ALU)) declined as a result of another reduction of its revenue guidance. Syntax-Brillian ((BRLC)) dropped 22% after posting lower-than-forecast quarterly revenue.

After early declines, S&P 500 futures rose 5.6 points at 1,481.80 and Nasdaq 100 futures rose 7.75 points at 2,004.00. Dow industrial futures rose 40 points.

[R]U.S. jobless claims rose less than expected in the latest week.[/R]

Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended September 8, showing that jobless claims rose less than economists had been expecting compared to the previous week. The report showed that jobless claims rose to 319,000 from the previous week''s revised figure of 315,000. Economists had expected jobless claims to rise to 325,000 from the 318,000 originally reported for the previous week. The Labor Department also said that the less-volatile four-week moving average edged down to 324,000 from the previous week''s revised average of 325,000.

Additionally, the report showed that continuing claims in the week ended September 1 fell to 2.585 million from the preceding week''s revised level of 2.591 million. The smaller than expected increase in weekly jobless claims may help to offset some of the recent concerns about the labor market that were raised by the release of the August employment report last Friday. The August report showed that non-farm payrolls unexpectedly fell by 4,000 jobs following a downwardly revised increase of 68,000 in July. Economists had expected an increase of about 110,000 jobs compared to the increase of 92,000 originally reported for the previous month.