By Anora Mahmudova and Sara Sjolin, MarketWatch
Consumer spending falls in January
NEW YORK (MarketWatch) -- U.S. stocks moved higher on Monday,
sending the Nasdaq Composite to the 5,000 level while the Dow Jones
Industrial Average trades above its previous record close.
Monday's economic reports 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 modestly.
Consumer spending
(http://www.marketwatch.com/story/consumers-spend-less-save-more-at-start-of-2015-2015-03-02)
in January fell by more than expected, while the savings rate rose
as Americans chose to pocket savings from cheaper gasoline.
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 100
points, with two-thirds of its 30 components in the green. Closing
at this level, the blue-chip index would score a new 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 in spite of 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 were not great, they were not 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 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 sharply 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 20% 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 26% in
premarket action 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/).
Trading in the stock was halted after the opening bell, possibly
because the company is about to issue a statement to the TV
program.
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: Oil prices (CLJ5) moved firmly lower
(http://www.marketwatch.com/story/oil-slides-after-posting-strong-february-gains-2015-03-02)
after posting strong gains in February. Gold (GCJ5) inched higher
(http://www.marketwatch.com/storyno-meta-for-guid), while 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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