Dow hits 4-year high on manufacturing strength
The blue chips rise as many as 125 points before closing up 66. Manufacturing unexpectedly expands in April. Auto sales are better than expected. Crude oil tops $106. Energy and finance stocks are market leaders. Apple gives up early gains.
By Charley Blaine May 1, 2012 1:02PM
Updated: 6:24 p.m. ETStocks began May with a solid rally after an important measure of manufacturing in the United States showed surprising strength in April.
Even if the market faded in late-day trading, the Dow Jones industrials ($INDU) hit their highest intraday and closing levels in more than four years, and the Standard & Poor's 500 Index ($INX) hit its highest level in a month.
The Institute for Supply Management's manufacturing index hit 54.8%, up from 53.4% in March and ahead of the consensus estimate of 53%. It was the best reading since June 2011 and the 33rd month in a row that the index showed growth in the manufacturing sector of the economy. A reading above 50% signifies growth.
At the same time, Ford Motor (F) and General Motors (GM) reported declines in vehicle sales from a year ago, but results for both were better than expected. Ford shares were down 5 cents to $11.23. GM shares rose 31 cents to $23.31. Chrysler sales were up 20% from a year ago to 141,165 vehicles. It was the best April performance for the company since 2008.
The Dow closed up 66 points to 13,279, its best close since Dec. 28, 2007. Its intraday high of 13,339 was its best since Dec. 31, 2007. The S&P 500 added 8 points to 1,406, its best close since April 3. The Nasdaq Composite Index ($COMPX) gained 4 points to 3,050. The Nasdaq-100 Index ($NDX) gained 3 points to 2,727.
Article continues below.
The Nasdaq and Nasdaq-100 both saw sizable gains fade almost entirely. The reason was Apple (AAPL), which dominates the index, saw a gain of nearly $13 fade to a loss of $1.85 at $582.13. It was the stock's 14th loss in the last 16 days.
Light sweet crude oil (-CL) jumped to $106.32 a barrel in New York. Brent crude added 19 cents to $119.66 a barrel.
Natural gas (-NG) was up 6 cents, or 2.6%, to $2.345 per million British thermal units. Gas is up 10.3% since the end of March but still down 22% for the year.
Gold (-GC) settled down $1.80 to $1,662.40 an ounce. Silver (-SI) fell 8.6 cents to $30.93 an ounce. Copper (-HG) added 1.4 cents to $3.8435 a pound.
Ahead for investors: ADP employment report, earnings from Whole Foods, Allstate
Wednesday's market faces the ADP National Employment Report, a measure of private-sector employment, and a Commerce Department report on factory orders. The ADP report may signal what Friday's big jobs report looks like.
Earnings are due from Green Mountain Coffee Roasters (GMCR), Clorox (CLX), Allstate (ALL), Transocean (RIG) and Whole Foods Market (WFM) among others.
Today's rally came after a middling April performance for stocks. The Dow managed a 16-point gain for the month. It was the blue chips' seventh straight monthly gain -- as well as the smallest over that time frame. But the S&P 500 and Nasdaq were off 0.4% and 0.7%, their first declines after four- and three-month winning streaks, respectively.
Investors could actually cheer the April performance. It came amid more volatility. The Dow was up or down 100 points or more on eight days. That was more than the six days of 100-point changes in all of the first quarter.
A pleasant surprise on U.S. manufacturing
The ISM report was a pleasant surprise, with sub-indexes for new orders, production and employment showing gains. The index for export orders was up 5 percentage points.
Stronger demand for automobiles is bolstering American manufacturing at a time when factories in other parts of the world are paring production as growth cools. At the same time, the industry faces head winds from smaller gains in business investment, less contribution from inventories and recession in parts of Europe.
While the U.S. manufacturing sector appears to be stable, the British manufacturing sector is a sadder story. The gauge of factory output, based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply, dropped to 50.5, the lowest this year, from a revised 51.9 in March, Markit said on its website today.
| Energy prices -- New York close | ||||||||||||
| Tues. | Mon. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $106.16 | $104.87 | 1.23% | 7.42% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $3.1771 | $3.1842 | -0.22% | 9.02% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $2.3710 | $2.2850 | 3.76% | -20.68% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $3.0971 | $3.1246 | -0.88% | 16.55% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $119.66 | $119.47 | 0.10% | 11.44% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.8090 | $3.8160 | -0.18% | 16.27% | ||||||||
| (per gallon; AAA) | ||||||||||||
Chrysler sales lead stronger-than-expected auto sales
Chrysler sales climbed 20% to 141,165 light vehicles, according to a company statement. Ford deliveries fell 5.1% to 179,658 cars and light trucks, and GM sales dropped 8.2% to 213,387.
The automakers beat analysts' estimates calling for a 16% gain for Chrysler, 5.7% decline for Ford and 9% decrease for GM.
Toyota Motor (TM) said sales grew 12%; analysts were looking for a 10% gain. Nissan (NSANY) sales slipped 0.3%.
U.S. auto sales have climbed every month since June 2011, according to researcher Autodata Corp.
The seasonally adjusted annual rate for sales may be 14.3 million.
Chesapeake Energy shares fall back on loss
Chesapeake Energy (CHK), the second-largest independent natural gas producer, rose $1.16 to $19.60 in regular trading but fell back sharply after hours after reporting a first-quarter loss and announcing a reduction in capital expenditures in the face of decade-low natural gas prices. Shares were at $18.47 after hours, down 5.7%.
Earlier in the day, the company announced it was splitting its executive chairman and CEO positions to reduce criticism about CEO Aubrey McClendon's possible conflicts of interest.
Reuters recently reported that McClendon had taken out as much as $1.1 billion in personal loans with his well stakes as collateral, an arrangement that analysts and academics said posed potentially serious conflicts of interest.
Chesapeake lost $71 million, or 11 cents per share, compared with a net loss of $205 million, or 32 cents per share, a year ago. The company had bet big on natural gas but is facing liqudity issues over the next few years because of heavy borrowing.
Broadcom falls on profit warning; CBS shares jump on earnings gain
Shares of Broadcom (BRCM) fell 1.4% to $36.20 after hours. The chip maker said the profit margin for its second quarter would fall from the first quarter because of acquisition-related costs.
The company's chips are used in products ranging from cellphones to network equipment, forecast revenue of $1.9 billion to $2 billion, implying a midpoint below the $1.969 billion expected by Wall Street, according to Thomson Reuters.
That was a touch lower than expected. Apple is a big customer. In the regular session, Broadcom closed up 11 cents to $36.71.
CBS (CBS) shares rose 2.9% after hours to $33.42 after reporting an 80% gain in net income to $363 million. Earnings were up 86% to 54 cents; analysts had expected 44 cents. Revenue was up 11.8% to $3.92 billion.
Energy and financials power the market
The market was led by gains in energy and financial stocks. Energy shares were higher because of the gains in crude oil and natural gas prices.
Alcoa (AA), up 24 cents to $9.97, and Bank of America (BAC), up 20 cents to $8.31, were the biggest percentage gainers among the 30 Dow stocks. JPMorgan Chase (JPM) was fourth, up 81 cents to $43.79. Chevron (CVX) was sixth, up $1.71 to $108.27.
Twenty-two of the 30 Dow stocks were higher. The laggard was Cisco Systems (CSCO), down 18 cents to $19.98.
Sears Holdings (SHLD), Archer-Daniels-Midland and Chesapeake Energy were the top performers among S&P 500 stocks. A total of 367 S&P 500 stocks were higher. The laggards were Meadwestvaco (MWV) and Avon Products (AVP).
Sears, controlled by hedge-fund executive Edward Lampert, said it expects first-quarter earnings per share of $1.46 to $1.84 after a gain from selling some stores in the U.S. and Canada. Shares were up $8.27 to $62.05.
Seventy-seven Nasdaq-100 stocks were higher, led by Sears and Seagate Technology (STX). The laggard was Research In Motion (RIMM).
| Short hits from the markets -- New York close | ||||||||||||
| Tues. | Mon. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.0900% | 0.090% | 0.00% | 800.00% | ||||||||
| 5-year Treasury note | 0.835% | 0.811% | 2.96% | 0.60% | ||||||||
| 10-year Treasury note | 1.956% | 1.915% | 2.14% | 4.54% | ||||||||
| 30-year Treasury bond | 3.161% | 3.109% | 1.67% | 9.42% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 78.935 | 78.848 | 0.11% | -1.97% | ||||||||
| British pound | 1.6226 | 1.6244 | -0.10% | 4.43% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.616 | £0.616 | 0.10% | -4.24% | ||||||||
| Euro in dollars | $1.32 | $1.32 | -0.05% | 2.18% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.755 | € 0.755 | 0.05% | -2.14% | ||||||||
| U.S. $ in yen | 80.32 | 79.83 | 0.40% | 4.18% | ||||||||
| U.S. $ in Chinese | 6.30 | 6.28 | -0.03% | -0.42% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $1.015 | $1.014 | 0.15% | 3.44% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $0.986 | $0.987 | -0.15% | -3.33% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,662.40 | $1,664.20 | -0.11% | 6.10% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $3.844 | $3.830 | 0.37% | 11.86% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $30.9300 | $31.0160 | -0.28% | 10.80% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $6.4300 | $6.5450 | -1.76% | -1.49% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $6.2900 | $6.343 | -0.83% | -2.71% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $0.8968 | 0.894 | 0.31% | -2.18% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $1.8415 | 1.7955 | 2.56% | -19.81% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $106.16 | $104.87 | 1.23% | 7.42% | ||||||||
| (per barrel) | ||||||||||||
146Comments
May 1, 2012 2:25PM
I'm greatful that the market is recovering from recent losses and am optimistic that the ecomomy will start to improve but, people are still paying a high price for the everyday items they need to live on just to get by. Just imagine if the price of gasoline was at 1.75 a gallon peoples attitude would change and the market would be at 16,000 plus and climbing. An extra 600 to 700 dollars a month in the pockets of main stream america would do wonders to this nation!!!!
May 1, 2012 5:12PM
May 1, 2012 2:59PM
culatr,
Manufacturing can go up because we still do make things here in America. For example, I'm having my bathroom remodeled next week and I made sure that the fixtures I bought (Moen) were made in the USA, the Kohler toilet, USA, NuTone medicine cabinet, USA, and the tile.....USA. Oh, the tub and surround, Swanstone.....USA.
How about you, are you willing to spend more to make sure you keep the jobs here ?
May 1, 2012 3:01PM
Why is it that people think only "wall street" or the "fat cats" are the only ones who are making money with the market? Millions of Americans 401 and thus their retirement is directly tied to how the market does. When it goes up, people from all walks of life benefit, not just "wall street". BTW, who the hell is "wall street" when someone says this anyway? Also, a lot of knuckleheads post that the market is being manipulated during an election year to try to get Obama re-elected. If you really believe that then you should be fully invested in the market between now and the election and pull out your money the day before November 4th. If you have it all figured out you should make a ton of money then take your prfoits at just the right time. So why are you bitching so much about the market??????
May 1, 2012 4:59PM
Crude oil over $106 again, as always this is more great news for the consumer just when the price of gas has started to drop a few cents. Why is it going up again, has demand improved, no, are there any shortages, no. What it boils down to as always are the Scumbag Speculators on Wall Street. These people need to be stopped one way or the other. All they are doing is punishing the working and poor people in this country while all the time they are fattening their bank accounts more. There is no justification what so ever for oil to be at the current price. It is about time that Congress clamped down on these people once and for all. What amazes me is that the big experts said that the Iran thing has added $20 or $25 to a barrel of oil. Now that tensions have eased, you would think that it would drop, wrong instead they are bringing it up more. This is so unfair to the American People.
May 1, 2012 3:33PM
Was I dreaming over the last few years, or did I really hear from the Fed that inflation was under control??? Every time I go to the gas pump, the grocery store or anywhere else, I know that inflation is out of control.
Also, I took a 35% pay and benefit cut over the last few years and am working 1.75% more...no wonder the stock market speculators love this.
Ah, that's right, POLITICS! Shame on the Fed, our political leaders and the large corporations!!!
May 1, 2012 4:47PM
Dennis Duffy....
Worst Presidents ever? Hard to say... I can only evaluate those in my lifetime, or from what I have read from history (jaded as usual by the authors opinions).
I am old. I was in high school when Ike was President...
Here is my list from best to worst...
Reagan (Ended Carter's malaise, cold war)
Kennedy (slashed taxes on the wealth, Cuban missile crisis handling)
Clinton (Welfare reform, compromised to reduce deficits)
Eisenhower (8 good years of growth and prosperity)
Bush I (Gulf War I victory, defeated for violating 'read my lips, no new taxes'
Nixon (Opened China, ended LBJ's Vietnam)
Bush II (created a bad entitlement Medicare Part D, 2 Wars of dubious value)
Johnson (father of massive deficit spending, a complete failure with War on Poverty)
Ford (in a word Inept)
Carter (Only Honest President, Incompetent manager of the economy)
Obama ( Incompetent and corrupt, massive debt, on the plus side he killed Osama.
In the last 50 years 2 clearly stand out as the worst. Carter and Obama. Obama gets the edge for the worst because his administration makes Nixon's look Honest. Both are economically clueless.
I think most people who lived through these Presidents will find the list close. Young people under 30 have no point of reference beyond Clinton... People can only read about Presidents and the obvious slants if they didn't live through the era.
May 1, 2012 4:41PM
LostOnEarth CLEVELAND (AP) — Five men, three of them Libertarian anarchists and the other 2 Republican KKK members, plotted to blow up a bridge near Cleveland and were nabbed because they were working with a man who was actually an FBI informant, law enforcement officials said Tuesday in announcing the men's arrests. Exterminate all the filthy Libertarian and Republican roaches! 
This board USED to be a forum for people to discuss the economy and politics in AN ADULT AND INFORMED MANNER. With this above statement, I see that it's no longer true; it's resorted to misinformation and juvenile name-calling.
Not sure what article YOU'RE reading, but the one posted on MSN states this:
"On what appeared to be the Facebook pages of Hayne, Stafford and Baxter, there were claims that they were affiliated with Occupy Cleveland...." and "They carried flags associated with anarchist groups."
Correct me if I'm wrong, but isn't the Occupy Wallstreet group more affiliated with the Democrats and liberals?? So, Mr. LostOnEarth, perhaps instead of resorting to pointless insults and rhetoric, you should stay on topic and make your point clearly, concisely and accurately. In short, grow up. 
May 1, 2012 1:29PM
"Dow hits 4-year high . . . ."
Pure propaganda.
Lies and propaganda by the people who were responsible for preventing, causing, creating, and reporting on the worst financial collapse since the Great Depression.
This whole bunch is still here, and still running the FED and Wall Street. No one has been prosecuted. No one one is in jail. The game remains the same.
Capitalism is dead. The Free Market economy is dead. But the crooks, theives and liars still rule. Charley Blaine can smile all he wants to.
Bring out the fake meat. Bring on the rally.
"Don't trust them. Don't believe them. Don't have anything to do with them."
May 1, 2012 2:51PM
May 1, 2012 1:59PM
May 1, 2012 8:18PM
May 1, 2012 5:09PM
Watch China. The whole world may be altered by what is going on there. They are a HUGE market and should not be ignored. And they are only getting stronger. Have a way to go to surpass the US but the day may come. Now if we could only get them to take North Korea and shake some sense into them, that part of the world might be a lot safer. Still shudder when I see the North Koreans doing the "goose step."
May 1, 2012 3:37PM
May 1, 2012 2:30PM
May 1, 2012 1:49PM
I am with you Nick. My portfolio has done great these past 4 years. A bunch of losers post here who are so stupid they missed out on the money that was made. Any moron knows that when the market went down about 50% from its all time high (like it did in 08) that it was time to get back in. I got back in at 8500 so I dint time it quite right but I cannot complain about how my investments and retirement fund has grown over the last four years. A bunch of losers who missed out want to try to tell everyone its not real...lol...tell that to my bank account. Just because you were too stupid (or didnt have the balls) to get in and make money these last four years, dont try to blame it on someone else or try to convince others its all a hoax.
May 1, 2012 5:15PM
8 million more jobs.....Saved gm and us jobs with auto bailout.......housing market up from when he took over as well........
Where are these 8 million jobs? I don't see 8 million more people working, if so unemployment would be much lower.
If GM had gone bankrupt, someone would have bought them and kept them running, just like American Airlines is still flying, even though it's in bankruptcy. All they did was rewrite the rules to protect their cronies.
You think housing is UP?!!! Housing prices continue to fall nationwide, with many foreclosures in the pipeline. If you want to see how many Democrats gleefully participated in the destruction of the housing market, watch "Inside Job".
May 1, 2012 6:08PM
May 1, 2012 5:10PM
May 1, 2012 4:14PM
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