Markets & Finance

Stocks Post Solid Gains


Stocks finished Monday with solid gains as investors rallied around hopes for an interest rate cut from the Federal Reserve this week and cheered a favorable decision on Microsoft's (MSFT) antitrust case Friday.

After being up nearly 200 points, the Dow Jones Industrial pulled back somewhat to end higher by 53.96 points, or 0.63%, at 8,571.60. The tech-heavy Nasdaq composite index was up 35.84 points, or 2.63%, to 1,396.54. And the broader Standard & Poor's 500-stock index added 7.38 points, or 0.82%, to 908.34.

Tuesday's session will include earnings updates from pharmaceutical distributor AmericourceBergen (ABC), energy concern Calpine (CPN), and insurer MetLife (MET).

On the political front, mid-term U.S. congressional elections will be held Tuesday. Republicans and Democrats are in a tight race to win majority control in the both houses of Congress. The stakes are high as a shift in power to the Republican Party is seen as more beneficial to the interests of Corporate America.

On Wednesday, the Fed's interest rate policy setting committee is widely expected to lower rates as the economy continues to show evidence of weakness. Most economists are expecting a cut of 25 basis points while some are hoping for a more aggressive 50-basis-point move. The Fed last cut rates in December, 2001. There were 11 rate decreases in 2001, bringing the overnight rate to a 40-year low of 1.75%.

A key win for Microsoft helped lift the major indexes Monday. Shares of Microsoft, which is a member of the Dow average and the Nasdaq composite index, led the broader market. The software giant said a federal judge endorsed its settlement with the U.S. government and nine states. The decision is seen as a win for Microsoft since it rules out increases to the settlement.

Another Dow member, Disney (DIS), gained ground after a report in Barron's that said value investors are buying shares despite the company's problems.

Automakers, which recently disclosed dismal sales, gained ground after recent steep selloffs. General Motors (GM) rose after Banc of America raised its fourth-quarter earnings estimate. Shares in GM and Ford (F) both gained ground.

Dow members Hewlett-Packard (HPQ) and American Express (AXP) were also on the rise.

Cisco Systems (CSCO) gained ground and helped lift the networking sector. The influential tech company will report its fiscal first-quarter earnings report after the close Wednesday.

In other company news, May Department Stores (MAY) said that it expects its fiscal third-quarter profit, excluding charges, to be in line with or slightly below Wall Street analysts' estimates on weak sales.

Treasury Market

U.S. Treasuries finished lower in price as equities gained solid ground on the latest positive news for Microsoft. Some gauges of retail data are due Tuesday, but the data are not expected to move markets. Investors are eagerly eyeing Tuesday's election results and the outcome of Wednesday's Federal Open Market Committee meeting.

World Markets

European stocks finished higher on strength in the U.S. equities market. London's Financial Times Stock exchange index finished up 144.50 points, or 3.62%, to 4,141.50. Meantime, Germany's DAX index gained 162.78 points, or 5.14%, 3,327.94. France's CAC index ended higher by 109.16 points, or 3.51%, to 3,218.67.

Asian stocks finished up Monday. Tokyo's market was closed for Cultural Day Monday. On Friday, Tokyo's benchmark Nikkei 225 index added 45.24 points, or 0.52%, to 8,685.72. Hong Kong's Hang Seng Index surged 313.15 points on Monday, or 3.33%, to 9,720.83.


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