Wall Street rallied to finish moderately higher yesterday as nervous investors got some reassurance from General Motors' new labor agreement...
NEW YORK — Wall Street rallied to finish moderately higher yesterday as nervous investors got some reassurance from General Motors’ new labor agreement and a favorable court ruling for cigarette makers. Technology stocks rebounded ahead of three major profit reports.
At the close of trading, the Dow Jones industrial average gained 60.76 to 10,348.10.
Microsoft, one of the 30 Dow stocks, slipped 14 cents to close at $24.53 a share. Boeing, also a Dow stock, fell 26 cents to $67.24.
Broader stock indicators also advanced. The Standard & Poor’s 500 index rose 3.53 to 1,190.10, and the Nasdaq composite index added 5.47 to 2,070.30.
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GM’s tentative union deal calmed investors who feared worsening finances at the struggling automaker. The market also got a lift from strong quarterly earnings in the financial sector and the Supreme Court’s refusal to let the government pursue a $280 million racketeering penalty against tobacco firms.
The upbeat news helped offset rising crude oil, which added nearly $2 a barrel as a strengthening Tropical Storm Wilma posed yet another threat to the Gulf Coast region. A barrel of light crude climbed $1.73 to settle at $64.36 on the New York Mercantile Exchange.
Ed Peters, chief investment officer at PanAgora Asset Management, said that while corporate earnings have so far been positive, high oil and gas prices and continued speculation about the Federal Reserve’s interest-rate-tightening campaign have been holding back the market.
“I think there’s still uncertainty about how far the Fed is going to go, and uncertainty about the effect of higher energy prices on the economy,” Peters said. “We’re seeing a modest bounce-back, but it doesn’t seem to have a lot of conviction.”
With little economic data due yesterday, investors were relying on the first wave of third-quarter earnings reports as a gauge on the economy and Gulf Coast recovery efforts following hurricanes Katrina and Rita. Wall Street will pay particular attention to fourth-quarter and 2006 forecasts for further signs of recovery — or trouble.
Bill Strazzullo, chief market strategist at State Street Global Markets, said that as earnings and forward-looking guidance unfold, he’s looking for the S&P 500 to top 1,200 as an indication of whether Wall Street might see another rally.
“In the next week or so, we’re going to see how the fourth quarter is shaping up,” Strazzullo said. “I want to see the market show me it can gain traction above 1,200 again. I’d rather buy that strength than speculate now.”
Tech investors received good news after the session, when IBM said its third-quarter profit dipped but still beat Wall Street targets by 13 cents per share on strength in its services unit. IBM rose 24 cents to close at $82.59, and gained another $1.09 in after-hours activity.
Intel and Motorola, also considered major barometers of the tech sector’s health, are set to report earnings today.
General Motors jumped $2.11 to $30.09 after the company said it reached a deal with the United Auto Workers to cut health-care costs.
However, the struggling automaker posted a $1.6 billion deficit for the third quarter, far greater than analysts had expected.
Wall Street has been worried about GM’s finances for months. The anxiety increased this month when parts supplier Delphi, a former GM unit, filed for bankruptcy.