New York – Wall Street began the week with a strong start Monday as better-than-expected profits at Citigroup Inc. and a healthy increase in consumer spending renewed investors’ optimism about the economy. The Dow Jones industrials soared more than 100 points.
Earnings reports begin arriving at a steady clip this week, giving investors fresh indications about companies and the overall economy. This week, nearly half of the 30 companies that make up the Dow industrials report results.
While investors have been girding for a slowdown in growth of corporate profits, they are hoping consumer spending will remain robust. The Commerce Department on Monday reported that consumers spent strongly last month, sending retail sales up by about 0.7 percent. The figure was close to what analysts predicted and up from a revised 0.5 percent increase in February.
Investors were also pleased by news of a buyout of SLM Corp., the student lender better known as Sallie Mae. SLM agreed to be sold to J.P. Morgan Chase & Co., Bank of America Corp. and two private-investment funds for $25 billion, or $60 per share. Sallie Mae rose $8.29, or 17.7 percent, to $55.05.
But analysts warned that Wall Street’s good humor was unlikely to last. Robert Schaeffer, portfolio manager at Becker Value Equity Fund, contends that a pop in stocks is typical when earnings reports begin to flow in and are better than expected.
The Dow Jones industrial average rose 108.33, or 0.86 percent, to 12,720.46. The Dow’s increase Monday put the blue-chip average back above where it stood before the major U.S. indexes fell more than 3 percent Feb. 27 as part of a worldwide sell-off. The Dow is within about 66 points of its all-time closing high of 12,786.64, reached Feb. 20.
Broader stock indicators also rose. The Standard & Poor’s 500 index rose 15.62, or 1.08 percent, to 1,468.47, a 6 1/2-year high. The Nasdaq composite index rose 26.39, or 1.06 percent, to 2,518.33.
Bonds advanced, with the yield on the benchmark 10-year Treasury note falling to 4.74 percent from 4.77 percent late Friday. The dollar traded near all-time lows versus the euro and was mostly lower against other major currencies.
Oil prices were flat Monday, with a barrel of light, sweet crude settling down 2 cents at $63.61 on the New York Mercantile Exchange. Gold prices rose.
The Commerce Department reported businesses increased their inventories by 0.3 percent in February, the largest increase in five months.
