U.S. stocks finished solidly higher Tuesday in March's final session, giving the market its best monthly performance in six years. Banks and tech issues led the rally, helping to pare losses suffered by the market earlier in the quarter.
Tuesday's gains came as money managers squared positions on the last trading day of March and the first quarter. The 30-stock Dow Jones industrial average finished higher by 86.90 points, or 1.16%, at 7,608.92.
The broad S&P 500 index gained 10.22 points, or 1.30%, to 797.75.
The Nasdaq composite index added 26.79 points, or 1.78%, to 1,528.59.
On the New York Stock Exchange, 23 stocks finished higher in price for every seven that declined. Breadth on the Nasdaq was 19-9 positive.
Treasury prices rose in a rebound from an early slide. The dollar index was lower. Gold futures were higher. Energy futures were mixed.
Wall Street closed the books on a tumultuous quarter Tuesday. The swings in equities were so great that the quarter "contained its own bear market and bull market", according to an Associated Press report.
The month of March featured gains of 7.7% for the Dow, 8.5% for the S&P 500, and 10.9% for the Nasdaq. But the first quarter numbers were not quite so pleasing, with losses of 13.3% for the Dow, 11.7% for the S&P 500 and 3.1% for the Nasdaq.
The blue-chip Dow and S&P indexes remain over 40% below their record closing levels reached in October, 2007.
Traders Tuesday weighed reports that the S&P Case-Shiller 10-and 20-city home price indexes fell in January, the Conference Board's consumer confidence index rose to 26.0 in March from 25.3 in February, and the March Chicago purchasing managers' index fell to 31.4 from 34.2. The market was bracing for disagreements among the world's economic powers over stimulus and regulatory measures at the G20 meeting in London later this week.
Fritz Henderson, the new CEO of General Motors Corp. (GM) said Tuesday that more of the automaker's plants could close as part of GM's effort to meet new, tougher requirements for government aid. In his first news conference as CEO, Henderson said he expects the company would "need to take further measures" in terms of plant closures. That's beyond the five plants the company said it would shutter when it submitted a restructuring plan to the government last month.
GM also is likely to offer another buyout program to workers as it looks to cut labor costs, Henderson said.
"We continue to see any GM turnaround plan including the significant dilution of existing shareholders' positions, as other stakeholders are likely to accept equity in exchange for obligations due to them," wrote S&P equity analysts in a note Tuesday.
GM shares closed lower by 76 cents to 1.94 Tuesday.
Homebuilder Lennar Corp. (LEN) reported a first-quarter loss of 98 cents per share, vs. a 56 cents loss one year earlier, on a 45% decline in revenue from home sales. Wall Street was looking for loss of about 64 cents. Says revenues were lower primarily due to a 38% decrease in the number of home deliveries and a 12% decrease in the average sales price of homes delivered in 2009.
Lennar shares were down 1.20 to 7.51.
Altria Group's (MO) Philip Morris unit lost a final chance in the U.S. Supreme Court to overturn a $79.5 million punitive damages ruling against it from a case involving a smoker's death. The high court dismissed the Philip Morris appeal without issuing an opinion, ending the third appeal the company had secured before the Supreme Court in its fight to reign in an award by an Oregon jury. The Supreme Court's dismissal also means no new legal precedent was set on punitive damages, a development that is likely to disappoint business groups that have continued to press for additional punitive damages guidance from the high court.
Altria shares fell 36 cents to 16.02.
Ingersoll-Rand (IR) said it expects first-quarter adjusted EPS to be at the low end of its previously forecasted range of a loss of 15 cents to breakeven. The company also lowered its quarterly dividend to 7 cents from 18 cents.
Ingersoll-Rand was down 18 cents to 13.80 Tuesday.
In economic news Tuesday, the Chicago purchasing managers' index dropped to 31.4 in March from 34.2 in February and well below the 34.5 that markets had expected. This month's figure is also well below the 48.2 seen a year ago. The components were mixed. The employment reading rebounded to 28.1 from 25.2, while new orders edged up to 30.9 from 30.6. Prices paid slipped to 34.1 from 37.8.
"The worse than expected headline reading should put some downward pressure on equities and bond yields today," says Standard & Poor's senior economist Beth Ann Bovino.
The Conference Board reported that its consumer confidence index edged up to 26.0 in March from a record low of 25.3 in February. The consensus estimate was a slightly bigger increase, to 27. The assessment of the current economy slipped to 21.5 from 22.3, but expectations for the future improved to 28.9 from 27.3. Overall, not quite as good as expected but at least up after February's plunge.
The U.S. S&P Case/Shiller home price index fell a record 2.76% to 146.40 in January for the 20-city composite, vs. December's 150.66. On a year-over-year basis, the index is down 18.97%, a fourth consecutive month of better than 18% declines. The 10-city composite fell 2.52% to 158.04, and is down 19.4% year-over-year compared to -19.19% previously. All 20 cities in the index declined, paced by Phoenix (-5.50%), Minneapolis (-4.75%) and Chicago (-4.64%).
Philadelphia Federal Reserve Bank President Charles Plosser warned in a speech Tuesday that great care should be taken in the expansion of the Fed's oversight powers, which if extended to the entire financial system could put its dual mandate at risk. The non-voter also cautioned that lending policies shouldn't allocate credit across firms and sectors and that the Fed's balance sheet must contract to maintain price stability as the economy recovers.
Dow Jones reports the OECD expects the U.S. to undergo an even deeper recession, and weaker recovery, than the White House assumes in its budget. Gross domestic product should contract 4% this year from 2008, the OECD said, a much sharper contraction than the 1.2% slide the White House used in crafting its budget. The OECD expects GDP to be flat next year, vs. the White House's 3.2% growth forecast. If the OECD is correct, then the U.S. budget deficit could be even higher than the White House estimate of $1.75 trillion in fiscal year 2009 and $1.17 trillion in 2010, issued a little more than a month ago. The U.S. unemployment rate should hit 10.5% by the end of next year, the OECD said. In contrast, the White House sees it averaging just 7.9% next year.
World Bank President Robert Zoellick said the dollar will remain the world's dominant reserve currency and a strong U.S. currency is critical to lifting the world out of economic and financial crisis. Speaking at a newsmaker event at Reuters' London office, Zoellick announced a $50 billion program to reverse a sharp drop in trade in the global crisis and urged G20 leaders to back the effort. But he played down the chances of a dethroning of the dollar as the world's leading currency.