U.S. stocks close at highest in three months
NEW YORK (MarketWatch) -- U.S. stocks rose Monday, ending at their highest in three months, as better-than-anticipated corporate earnings and diminished concern about Europe's debt troubles heartened sentiment.
The Dow Jones Industrial Average (DJIA) rose 21.34 points, or 0.2%, to 13,117.51, its highest close since May 3. At its highs of the day, the Dow was up 91 points.
"Year-over-year earnings look okay," said Paul Nolte, managing director at Dearborn Partners. "You have companies managing costs and the expense side of business very closely," he said.
And, "we're still expecting Europe to take some action, so we're getting a temporary boost," said Nolte.
Some of the enthusiasm for stock buying, which extended last week's gains, waned in the last hour of trading, however, with the major indexes closing off their intraday highs.
The S&P 500 index (SPX) ended up 3.24 points, or 0.2%, at 1,394.23, its highest since May 2 but off an intraday peak of 1,399.63. Materials and technology were the leading performers and utilities the worst among its 10 industry groups.
"We keep bumping up against 1,400 on the S&P 500, it seems to be a magnet," said Nolte of the level last breached in May.
Among the index's best performers,
Off the S&P 500,
The Nasdaq Composite (COMP) rose 22.01 points, or 0.7%, to 2,989.91, its highest since May 3.
Traction from Europe
For every stock rising fewer than two declined on the New York Stock Exchange, where composite volume was just over 3 billion, or about 85% of the past month's average. Nasdaq composite volume crossed 1.5 billion.
U.S. equities tracked European markets higher after German Chancellor Angela Merkel's government said it supported the ECB's bond-purchasing program. Italian and Spanish bond yields fell. Read more on Europe Markets.
But, it's a "temporary and rather fleeting change in yields," Nolte added of the decline in Italian and Spanish bond yields, which came on thinking the European Central Bank would buy the government debt of both nations in an effort to tame euro-area uncertainty.
The dollar (DXY) lost ground against other global currencies, in particularly the euro (EURUSD) . U.S. Treasury prices mainly rose, with the yield on the 10-year note (10_YEAR) falling to 1.56%. Read more on bonds.
"We have a modest recovery, we're moving in the right direction, and the negative profit growth this quarter will reverse itself in subsequent quarters, once lower commodity prices start to filter into other sectors," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
Friday's nonfarm payrolls report for July "wasn't a great number, but it was certainly a positive surprise. If investors can simply focus on the U.S., stocks can go higher," Ablin added. Read more on jobs report.
Payrolls rose by 163,000 in July, which was well above economists' expectations, though the jobless rate edged up to 8.3% from 8.2%.
While the July employment report likely lowered the chances of a third round of quantitative easing for now, and the promises made from European leaders "have yet to materialize into anything of substance, the market remains remarkably resilient and optimism seems to be increasing," noted Randy Frederick, managing director of active trading and derivatives at Charles Schwab.