The Dow Jones industrial average added 59.19 points, or 0.58%, to 10,251.70. The broader Standard & Poor's 500 index was up 5.31 points, or 0.46%, to 1,162.16. The Nasdaq composite index gained 7.00 points, or 0.36%, to 1,928.65.
Looking ahead to Tuesday, the main economic event of the week is the Federal Reserve Open Market Committee meeting. Economists expect the Fed to hike rates by a quarter point, bringing the key fed funds rate to 3%. Signs of slowing growth amid rising prices in the first-quarter, however, have left some uncertainty about the second-half outlook for the Fed's tight money policy.
Also on Tuesday, figures on March factory orders and April car sales will be released.
Companies on Tuesday's earnings calendar include conglomerate Tyco International (TYC
), insurance outfit MetLife (MET
), and video-game publisher Electronic Arts (ERTS
Standard & Poor's market analyst Paul Cherney says the markets are ripe for a rebound, but will need an outside boost. According to Cherney, the three major factors that will most affect the markets now are the Federal Reserve's Open Market Committee meeting Tuesday, oil prices, and the nonfarm payroll data due out on Friday.
Oil futures prices rallied on Monday afternoon as speculative buying reversed a downward price trend brought on by high inventories. Light, crude oil gained $1.20 cents to settle at $50.92 a barrel Monday.
In economic news Monday, March construction spending rose 0.5%, above the 0.2% forecast. Also, the Institute for Supply Management's April national manufacturing index fell to 53.3 in April from 55.2 in March, with employment falling to 52.3 from 53.3 and new orders dropping to 53.7 from 57.1. According to Action Economics, the ISM figures were weaker than expected.
In company news, Verizon Communications (VZ
) said that it has boosted its offer for MCI (MCIP
) to at least $26 per share in cash and stock, and MCI's board is recommending the new deal to shareholders. The offer values MCI at about $8.45 billion, still lower than Qwest's (Q
) most recent $9.9 billion offer. Following the announcement, Qwest dropped out of the bidding war.
Two private equity groups, Warburg Pincus and Texas Pacific Group, were close to a deal to buy luxury retailer Neiman Marcus Group (NMG.A
) for about $5 billion, or $100 a share, according to newspaper reports.
Insurance giant American International Group (AIG
) said Sunday that it will restate more than four years of financial reports, because of accounting errors, in a move that will cut $2.7 billion from its net worth. The restatement was less than analysts' expected.
In earnings news, cosmetics company Avon Products (AVP
) reported Monday that first-quarter profit increased 16 percent, and raised its full-year outlook.
Satellite television operator DirecTV (DTV
) said Monday reported a first-quarter net loss of $31 million, significantly lower than the loss of $639 million in the period last year.
Canadian telecom equipment supplier Nortel Networks (NT
) reported that net income dropped to $133 million in the three months ending Dec. 31, down 75 percent from the year earlier. The results still beat analysts' expectations, however, and the company forecast improved revenue growth in 2005.
Treasuries finished higher in price Monday ahead of Tuesday's Federal Open Market Committee meeting. The yield on the benchmark 10-year note finished the session at 4.19%.
European stock markets closed higher on Monday. Markets in the U.K. were closed for a bank holiday.
Germany's DAX index gained 39.18 points, or 0.94%, to close 4,224.02. News that sporting-goods maker Adidas agreed to sell its Salomon assets to Amer Sports Corp for 485 million was taken positively.
In Paris, the CAC 40 index added 27.06 points, or 0.69%, to close at 3,938.77. Steelmaker Arcelor rallied ahead of first-quarter results due tomorrow, and carmaker Renault was firm despite a downgrade from the brokerage Cheuvreux..
In Japan, gains on Wall Street Friday did little to inspire action in a thinned Monday trading session. The Nikkei 225 fell 6.79 points, or 0.06%, to 11,002.11. Although Japan traded Monday, this is Golden week and the market will be closed Tuesday, Wednesday and Thursday.
In Hong Kong, the markets were closed.