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US stocks go higher, european markets mixed

15 September 2009 06:44 (UTC +04:00)

Bakuâ€“ APA-ECONOMICS. Investors funneled money into utilities and industrial stocks, helping the market carve out modest gains after early losses.
Stocks rose after zigzagging in a tight range for much of trading Monday. Stocks recovered from steep losses at the open that came on worries about a trade dispute between the U.S. and China.
The Dow Jones industrial average, which had been down more than 100 points in the early going, rose slightly in the final hour of trading. Other major indexes also rose.
The U.S. government late Friday imposed trade penalties on tires coming from China. The Chinese government filed a complaint with the World Trade Organization. Investors had worried it would erupt into a tariff war that could damage an economic recovery.
Traders reacted coolly to a speech from President Barack Obama, who warned the financial industry against the type of recklessness that led to the collapse of the brokerage Lehman Brothers Holdings Inc. one year ago. That event sent the Dow down 500 points in one day and led to a freeze in the credit markets that power the world’s economies. The Dow is still down 12 percent from that time.
In sharp contrast to the tumult of a year ago, traders made only modest moves on Monday. Traders withdrew money from tech stocks, which have posted sharp gains this year, and moved it into areas that have lagged, like industrial stocks.
Student lender Sallie Mae weighed on financial stocks after Fitch Ratings downgraded the corporate ratings of SLM Corp., the company’s formal name, and said the outlook is negative.
Analysts drew encouragement by the market’s ability to hold the strong gains of last week and a six-month run in stocks that has left the Standard & Poor’s 500 index up more than 50 percent.
Adam Gould, senior portfolio manager at Direxion Funds in New York, is encouraged to see investors step in to buy when the market dips.
"We open lower and buyers seem to chip away, and we climb higher," he said. "It’s somewhat healthy that we’re rallying this way â€” slowly."
The Dow rose 7.56, or 0.1 percent, to 9,612.97. It had been down about 109 points at its low of the morning.
The broader Standard & Poor’s 500 index rose 4.04, or 0.4 percent, to 1,046.77, while the Nasdaq composite index rose 6.08, or 0.3 percent, to 2,086.98.
Investors have little economic news to provide insight into whether they have been right to bet on an economic recovery since stocks tumbled to 12-year lows in March. Reports on retail sales, inflation, industrial production and housing are due later in the week.
Improvements in consumer spending and the housing market are considered crucial to allowing the economy to mount a strong rebound.
Stocks posted modest losses Friday to break a five-day advance. The gains for the week were still big: The S&P 500 index rose 2.6 percent, as much as it has in some years.
Gould would like to see the market make steady gains and not rocket higher the way it did in March, at the start of the six-month rally.
"If we’re up one to two percent every week â€” that’s pretty good as opposed to being up four percent and down six percent," he said.
U.S. utility company AES Corp. pulled utility stocks higher following a report by The Wall Street Journal that China’s investment arm is interested in buying a stake in the company. AES rose 59 cents, or 4.2 percent, to $14.74.
Crude oil fell 45 cents to $68.84 a barrel on the New York Mercantile Exchange.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.41 percent from 3.35 percent late Friday.
The recovery in the credit market in the past year has been pronounced. When Lehman collapsed investors began rushing into the safety of government debt. Since early this year, borrowing costs have fallen as government’s have injected cash into financial markets.
The dollar traded mixed against other major currencies, while gold prices fell.
The Russell 2000 index of smaller companies rose 4.86, or 0.8 percent, to 598.45.
Three stocks rose for every two that fell on the NYSE, where volume came to 818.8 million shares compared with 888.6 million shares traded at the same point Friday.
Overseas, Japan’s Nikkei stock average fell 2.3 percent. Britain’s FTSE 100 rose 0.2 percent, Germany’s DAX index lost 0.1 percent, and France’s CAC-40 dropped 0.1 percent. Source: AP