By Anora Mahmudova and Sara Sjolin, MarketWatch
Consumer spending falls in January
NEW YORK (MarketWatch) -- U.S. stocks began the month on a
positive note, with a Monday rally nudging the Nasdaq Composite to
5,000 -- a level not reached since 2000 for the tech-heavy index
--while the Dow Jones Industrial Average also traded in record
territory.
Stock's march higher came amid economic reports on Monday that
pointed to a slowdown in manufacturing activity as well as consumer
spending. However, investors brushed off slightly disappointing
data, seemingly content with the fact the U.S. economy is still
growing, albeit, at a more modest clip.
Consumer spending
(http://www.marketwatch.com/story/consumers-spend-less-save-more-at-start-of-2015-2015-03-02)
in January fell more than expected, while the saving rate rose as
Americans chose to pocket savings from cheaper gasoline
(http://www.marketwatch.com/story/incomes-surge-spending-doesnt-whats-going-on-2015-03-02).
Meanwhile, the widely-watched Institute for Supply Management's
manufacturing gauge
(http://www.marketwatch.com/story/ism-manufacturing-gauge-slows-to-529-in-february-2015-03-02)
slowed in February, but was in line with expectations.
Disappointing investors was construction spending
(http://www.marketwatch.com/story/january-construction-spending-drops-11-2015-03-02-1091643),
which fell unexpectedly in January.
A survey of purchasing managers showed the final February
reading on the index was raised.
The S&P 500 (SPX) moved higher with six of its 10 sectors
trading higher. The index hovered near its record closing level.
The consumer discretionary sector was leading gains. Energy stock
took a hit as oil prices moved lower.
The Dow Jones Industrial Average (DJI) jumped more than 140
points, with two-thirds of its 30 components in the green. Closing
at this level, the blue-chip index would score a record. McDonald's
Corp and Visa Inc. were the top two performers among the blue
chips, while Chevron Corp and IBM lagged behind.
The Nasdaq Composite (RIXF) gained 0.7%, hitting the 5,000 level
for the first time since 2,000.
Colin Cieszynski, chief market strategist at CMC markets, said
that it is encouraging to see markets go up despite slightly weaker
data.
"Today's action in the market is a sign of confidence. People
are confident the economy is doing well. While today's data were
below expectations, misses were mild. The drop in construction
spending can be explained by harsh winter weather," Cieszynski
said.
Sam Stovall, U.S. equity strategist at S&P Capital IQ, said
while data weren't great, they weren't bad enough to push stocks
lower.
Stovall also mentioned record levels on indexes as the reason
for higher optimism.
"Nasdaq's reaching a round number 5,000 and 5,050, which was a
record, are serving like magnets to investors. Double all-time
highs in large-caps and small-caps last week are also boosting
confidence," Stovall said.
Stocks to watch: Shares of GoPro Inc. (GPRO) fell sharply after
Chinese smartphone company Xiaomi launched a wearable action camera
that offers many of the features of GoPro's Hero camera, but
retails at half the cost.
Sotheby's(BID) shares dropped after the auction company missed
profit expectations.
Warren Buffett's Berkshire Hathaway Inc.(BRKA) were slightly
lower after the Nebraska-based holding company over the weekend
posted lower earnings
(http://www.marketwatch.com/story/berkshire-hathaway-profit-shrinks-2015-02-28)
for the fourth quarter amid investment derivative gains of $192
million.
Athersys Inc.(ATHX) rallied 16% to $3.01 after the biotech firm
said it has set up a license agreement with Chugai Pharmaceutical
Co. .
Shares of Aruba Networks(ARUN) fell after the company announced
an agreement to be acquired by Hewlett-Packard confirming media
reports out last week, in a deal valued at $3 billion.
NXP Semiconductors NV(NXPI) jumped 15% and Freescale
Semiconductor Ltd.(FSL) gained 10% after the two companies
announced a merger with that will create a $40 billion company
(http://www.marketwatch.com/story/nxp-freescale-agree-to-merge-2015-03-02).
Shares of Lumber Liquidators Holdings Inc.(LL) fell 23% after
the retailer of hardwood flooring was linked to toxic chemicals on
"60 Minutes"
(http://www.cbsnews.com/news/lumber-liquidators-linked-to-health-and-safety-violations/).
Goodrich Petroleum Corp.(GDP) gave up 9% after the oil and gas
producer said it has started a public offering of 12 million shares
to repay debt and for other purposes.
Chinese rate-cut: In a surprise move, the People's Bank of China
on Saturday lowered the benchmark
(http://www.marketwatch.com/story/story?guid=%7BC27BAEEA-5F05-42CD-939E-3B9DA0B4A35E%7D)
one-year loan to 5.35% and the one-year deposit rate to 2.5%, both
cut by a quarter of a percentage point. The central bank signaled
in a statement that a looming threat of deflation was a trigger for
the rate cut. Asian markets closed mostly higher on Monday
(http://www.marketwatch.com/storyno-meta-for-guid).
Other markets: 10-year Treasury yields, which move inversely to
prices, climbed 6.4 basis points to 2%, as a measure of U.S. core
inflation met expectations.
Oil prices
(http://www.marketwatch.com/story/wti-crude-slips-back-by-the-close-2015-03-02)(CLJ5)
were volatile and settled with a modest loss. West Texas
Intermediate settled at $49.59 while Brent crude settled at $59.54,
narrowing the price spread between them. Gold futures
(http://www.marketwatch.com/story/heavy-economic-data-flow-set-to-tweak-gold-2015-03-02)(GCJ5)
reversed earlier gains and logged their first loss in four session,
settling at $1,208.20. The dollar (DXY) traded mixed against other
major currencies.
European stock markets were largely lower
(http://www.marketwatch.com/storyno-meta-for-guid), even as data
showed inflation rose to negative 0.3% in February from negative
0.6% in January, while the currency union's unemployment rate
dropped to the lowest since 2012
(http://www.marketwatch.com/story/eurozone-jobless-rate-falls-to-lowest-since-2012-2015-03-02).
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