Dow Rallies After Early Concerns Subside

By Jason Simpkins
Staff Writer

U.S. stocks posted moderate gains yesterday (Monday) – rebounding from early setbacks – as still-fretting investors get ready to navigate a stretch that will be largely bereft of corporate earnings reports or critical economic reports.

The Dow Jones Industrial Average climbed 42.27 points, or 0.32%, yesterday to close at 13,125.35, after experiencing gains and losses of more than 100 points each during the day. It was just below 13,000 at midday before shooting as high as 13,177.

The Nasdaq composite index posted a modest gain of 3.56 points, or 0.14%, to finish at 2,508.59. The Standard & Poor’s 500 Index skidded 0.39 points, or 0.03%, to close at an almost-even 1,445.

The markets reflected a lack of confidence despite the Fed’s move to cut the discount rate Friday. Plummeting U.S. Treasury yields, and layoffs by Countrywide and SunTrust Bank, had investors nervous early on.

But positive news came in the form of the Conference Board’s Index of Leading Economic Indicators, a closely watched gauge of future expansion. Its index of economic indicators showed a .4% increase in July an improvement over the .3% drop in June.

Of the Conference Board’s 10 leading economic indicators, consumer expectations, vendor performance, unemployment claims, real money supply, stock prices, and manufacturer’s orders for consumer goods and materials all showed improvement. Consumer confidence and jobless claims could increase in August, however.

The rest of this week will be light on economic reports, making it tough for investors to assess what the Fed might do at its next policymaking meeting. And with corporate earnings season mostly finished, there is little from that venue investors can use to make projections. The so-called “dog days of August” are some of the slowest stretches of the year for market researchers to make forecasts.

Markets in Asia also made notable rallies yesterday after taking some nasty hits on Friday. Tokyo’s Nikkei 225 Index climbed 3% after dropping 5.4% Friday. Hong Kong’s Seng Index made a 5.9% jump. And China's Shanghai Composite 5.3% higher.