- The Washington Times - Tuesday, June 2, 2009

Wall Street posted gains Monday, extending its rally into a fourth month on upbeat news about the U.S. and global economies.

The Dow Jones Industrial Average closed at 8,721.44, up 221.11 points. The broader Standard & Poor’s 500 Index closed at 942.87, up 23.73 points, and the tech-heavy Nasdaq Composite Index closed at 1,828.68, up 54.35 points.

The gains followed increases in foreign markets, after surveys in Europe and Asia showed that overseas manufacturing was improving.

Japan’s Nikkei stock average rose 1.63 percent. Britain’s FTSE 100 rose 2 percent, Germany’s DAX index rose 4.08 percent, and France’s CAC-40 rose 3.11 percent.

The Institute for Supply Management said the U.S. manufacturing sector is still contracting, but did so in May at a slower pace than in April. The group’s manufacturing index rose to 42.8 last month, compared with 40.1 in April. The group attributed the gain to more purchase orders.

The gains also followed the Commerce Department’s report that consumers reduced spending in April by 0.1 percent, better than analysts’ expectations and less than the 0.2 percent drop in March.

The department reported that personal income increased by 0.5 percent and disposable income increased by 1.1 percent, in part because of reduced income taxes and extended unemployment benefits in the economic stimulus package.

Construction spending increased in April by 0.8 percent — the second straight month for an increase.

“The manufacturing data seems to indicate demand is improving,” said Brian Lipps, a Charles Schwab & Co. vice president. “We’ve been working off inventory, and now it’s extremely low. So demand for goods is increasing. That’s obviously a positive.”

He also said General Motors Corp. filing Monday for bankruptcy had little effect on the markets because it was long expected.

The GM reorganization plan gives the U.S. government a 60 percent stake in the automaker.

The Dow dropped GM from trading because of the bankruptcy and replaced it with the computer network supplier Cisco Systems Inc. (CSCO).

“The perilous state of GM has left us with no choice but to remove it from the Dow,” said Robert Thomson, managing editor of the Wall Street Journal and editor-in-chief for Dow Jones. “A bankruptcy filing immediately disqualifies a stock regardless of a company’s history or its role as a cultural icon.”

The Dow also dropped Citigroup because of the federal government’s large financial stake during restructuring and replaced it with Travelers Cos. Inc. (TRV). The changes take effect Monday.

Citigroup stock closed at $3.69, down 3 cents.

The markets are up about 25 percent since hitting a 12-year low in early March with analysts saying major U.S. banks and most other sectors of the economy appear to be stabilizing.

Government bond prices fell again Monday, returning yields toward last week’s highs. The yield on the 10-year Treasury note, a benchmark for mortgages and other consumer loans, climbed to 3.68 percent from 3.46 percent Friday.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide