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Wall St gains as housing retailer Lowe’s lifts mood

Wall St gains as housing retailer Lowe’s lifts mood
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First Published: Tue, May 19 2009. 08 29 AM IST
Updated: Tue, May 19 2009. 08 29 AM IST
New York: US stocks rallied on Monday as better-than-expected results from the No. 2 US home improvement retailer, Lowe’s Cos Inc, helped spark broad-based buying on hopes the recession is easing and consumer spending is stabilizing.
Investors’ optimism extended to sectors closely aligned with economic growth, including homebuilders, banks, energy companies and retailers. Positive broker comments on Bank of America Corp, up nearly 10% at $11.73, boosted financial shares, while rising oil prices improved the outlook for energy names.
Shares of Lowe’s rose 8.1% to $19.94 after the company raised its full-year forecast due to signs that the housing market’s decline may be ebbing. Lowe’s Chief Executive Robert Niblock said consumer confidence has improved in recent weeks, and housing turnover is showing “signs of a bottom.”
That optimism helped lift shares of Lowe’s top rival Home Depot Inc, which added 6.6 percent to $26.02 a day before the Dow component is set to deliver its own quarterly scorecard.
“Lowe’s numbers come at a time when the market is looking to rebound,” said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut. “It does show that consumer spending in general has been a bit stronger than many had anticipated.”
The Dow Jones industrial average gained 235.44 points, or 2.85%, to 8,504.08. The Standard & Poor’s 500 Index rose 26.83 points, or 3.04%, to 909.71. The Nasdaq Composite Index advanced 52.22 points, or 3.11%, to 1,732.36.
The S&P 500 recently climbed from a 12-year closing low on 9 March, rising 37.4% through the close on 8 May. But after the benchmark index gave up some ground last week amid concerns about the economy and a flurry of secondary stock offerings, the S&P 500 was up 34.5% from that low at Monday’s close.
The S&P also moved back above 900, which some investors see as a key psychological level. The S&P closed above 900 in early May for the first time since the start of the year, but fell back into the 800s last week.
Lowe’s quarterly numbers also served as a fresh catalyst for investors eager to sustain the market’s rally and offered a sharp contrast to last week’s disappointing April retail sales data.
Investors watch retail sales closely because consumer spending accounts for two-thirds of US economic activity.
The Dow Jones US home construction index jumped 7.4%, helped by Citigroup’s upgrade of Lennar Corp shares to “buy” while an S&P index of retailers’ shares climbed 4.5%. Lennar’s stock surged 13.7% to $10.02.
In broker research news, Goldman raised its recommendation on Bank of America’s stock to “buy.” Separately, Citigroup said it now expects Bank of America will report a second-quarter profit instead of a loss.
The surge of Bank of America’s stock rippled throughout the bank sector, driving the KBW Bank index up 7.5%.
Shares of Exxon Mobil Corp added 2% to $70.50, and ConocoPhillips climbed 3.6% to $45.52 as US front-month crude rose $2.69, or 4.8%, to settle at $59.03 a barrel, the highest close since 11 November. An S&P energy index rose 3.1%.
Among the Nasdaq’s major advancers, chipmaker Qualcomm Inc shot up 3.1% to $41.99, as the semiconductor sector was bolstered by positive broker comments. The PHLX Semiconductor Index rose 3.7%.
Shares of International Business Machines gained 3.2% to $104.58 on the New York Stock Exchange and topped the list of the Dow’s biggest gainers.
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First Published: Tue, May 19 2009. 08 29 AM IST
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