May finishes merrily on Wall Street
By Hope Yen
NEW YORK Wall Street notched its third straight month of gains yesterday a feat not seen in nearly two years after investors cheered a pair of reports showing a rise in consumer sentiment and Midwest manufacturing.
Traders on the floor of the New York Stock Exchange assess the results of a good day, a good week and a good month. The consensus seemed to be that investors are gaining optimism. Consumer confidence, too, rose in May.
The Dow Jones industrial average closed up 139.08, or 1.6 percent, at 8,850.26. That reversed its loss of nearly 82 points Thursday when a five-day rally fizzled. It also was the highest level seen since Dec. 2, 2002, when the blue chips finished at 8,862.57.
The broader market also finished sharply higher.
The Nasdaq composite index rose 20.96, or 1.3 percent, to 1,595.91. That was the best level since May 31, 2002, when the tech-focused index closed at 1,615.73.
The Standard & Poor's 500 index gained 13.95, or 1.5 percent, to 963.59. That was the highest close since July 8, 2002, when the index stood at 976.98.
The three gauges also posted a third straight winning month, an achievement that investors hadn't seen since October-December 2001. In May, the Dow gained 4.4 percent, the Nasdaq advanced 9 percent and the S&P rose 5.1 percent.
For the week, the main gauges also finished higher with the Dow up 2.9 percent, the Nasdaq 5.7 percent higher, and the S&P up 3.3 percent.
Yesterday, the University of Michigan reported that its consumer sentiment index rose in May to 92.1 percent, according to Dow Jones Newswires. That is up from 86 percent in April, although it is lower than both a midmonth reading and the forecasts of analysts.
Meanwhile, the Purchasing Management Association of Chicago said its index of business activity rose to 52.2 in May, reflecting manufacturing growth in the Midwest.
Analysts said that could foreshadow an increase in the national manufacturing numbers to be reported Monday by the Institute for Supply Management.
However, the Commerce Department reported consumer spending down by 0.1 percent in April.
That was the largest drop since the start of the year and was a sharp reversal from March when consumers increased their spending by 0.8 percent. Economists had forecast a rise of 0.1 percent for April.
Also yesterday, the government reported that the incomes of Americans were unchanged in April after a gain of 0.4 percent in the previous month, a sign of the weak job market.
"The market's been rallying in the face of some pretty tepid economic data over the past number of weeks and so to get some good news is definitely a positive," said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee.
"I think people are encouraged."
Investors also were upbeat after an announcement from Microsoft that it would pay AOL Time Warner $750 million to settle an antitrust lawsuit over the software giant's conduct in making its Internet Explorer the dominant Web browser.
The pact, announced late Thursday, gives AOL-Time Warner free license to Microsoft browsing software for seven years. Microsoft also would license its digital media technology to AOL, as well as work with the company to promote digital media initiatives.
AOL rose 37 cents to $15.22 in trading on the Big Board. Microsoft gained 21 cents to $24.61 in trading on Nasdaq.
Imclone Systems jumped $5.04 to $28.50, a gain of 19.3 percent after news reports that data soon to be reported shows the company's drug Erbitux is an effective cancer treatment.
Advancing issues outnumbered decliners by an 11-to-3 ratio on the New York Stock Exchange. Volume was heavy at 1.69 billion shares, the same amount traded Thursday.
The Russell 2000 index, which tracks smaller company stocks, gained 8.36, or 1.9 percent, to 441.00.
In Europe, Germany's DAX index advanced 2.6 percent, Britain's FTSE 100 fell 0.9 percent, and France's CAC-40 increased 0.8 percent.