Closing Bell: Stocks Rise on Tepid Manufacturing Data

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Manufacturing at the MakerBot in New York City
Getty Images
U.S. stocks rose Monday as investors put concern about the potential for higher interest rates on hold after a report showed the economy isn't growing fast enough for the Federal Reserve to start winding down its stimulus programs.

The Dow Jones industrial average (^DJI) added 65 points (0.4 percent) to close at 14,974, falling back from above the 15,000 level, which it surpassed earlier in the day, when it gained 173. The S&P 500 (^GSPC) rose 8 points, for a similar 0.5 percent gain, to 1,614. The Nasdaq (^IXIC) added 31 points (0.9 percent) to 3,434.

U.S. manufacturing grew modestly in June after a pickup in new orders and stronger production, according to a private survey. The Institute for Supply Management said its factory index increased to 50.9 in June from 49 in the previous month.

A separate report on construction spending added to the picture of a gradually improving economy. Construction spending rose 0.5 percent in May compared to April, when spending was up 0.1 percent, the Commerce Department said.

In other business news, the U.S. government said it has received $66.3 billion in dividend payments from mortgage giants Fannie Mae and Freddie Mac, after both reported stronger earnings at the start of the year. Fannie Mae paid $59.4 billion to the U.S. Treasury while Freddie Mac paid $7 billion. The payments reflect a housing recovery that has made the mortgage giants profitable again, and are also helping to lower the federal deficit.

Former KPMG partner Scott London pleaded guilty to a securities fraud charge for providing insider information to a friend who plied him with cash bribes, a Rolex watch and other luxury items. London, who entered the plea in U.S. District Court in Los Angeles, could receive up to 20 years in prison when he's sentenced in October.

Among the stocks making big moves:
  • Onyx Pharmaceuticals (ONXX) surged $44.51, or 51 percent, to $131.33 after the company rejected a takeover bid from Amgen (AMGN), a larger biotechnology company. Onyx said other companies have expressed interest in a buyout.
  • Cablevision (CVC) rose $1.63, or 9.7 percent, to $18.45 after Reuters reported that Time Warner Cable (TWC) is considering making a bid for the company.
  • Steinway Musical Instruments (LVB) has agreed to be bought by private-equity firm Kohlberg & Co. for about $438 million. The 160 year-old company suffered from a lack sales during the recession, and while shares have recovered they have yet to return to the peak they achieved just six months prior to the economic downturn. Steinway shares ended Monday's trading up about 16 percent to $35.28.
  • A Credit Suisse analyst resumed his coverage of Best Buy (BBY) and lifted the electronics chain's prior price target as it continues to work on a turnaround plan. Shares of Best Buy rose sharply to $29.74.
  • Shares of Tesla Motors (TSLA) rose 9.1 percent to $117.18, their highest price ever, on optimism that the electric car company's deliveries for the second-quarter and full year will be higher than expected.
  • Google (GOOG) notched a legal victory in its bid to create the world's largest digital books library, winning the reversal of a court order that had allowed authors challenging the project to sue as a group. The 2nd U.S. Circuit Court of Appeals in Manhattan said it was too early for authors to be considered as a group in a lawsuit against the search-engine giant. Google stock advanced almost 1 percent.
  • Nokia (NOK) rose by more than 3 percent, after the former mobile phone leader announced plans to buy out partner Siemens' (SI) entire 50 percent stake in Nokia Siemens Networks for $2.2 billion.
What to watch Tuesday:
  • The Commerce Department releases May data on factory orders at 10 a.m. ET. Analysts expect manufacturing activity rose 2 percent during the month, according to consensus estimates.
  • Automakers report June sales figures. Industry watchers forecast auto sales rose slightly to 15.5 million units last month, up from 15.3 million in May.

Compiled from staff and wire reports.


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9 Comments

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begeology

How stupid for stocks to respond in a positive manner to this bad news. The stock market is a slave to Washington now.

July 02 2013 at 8:30 AM Report abuse rate up rate down Reply
rich_paddlyrich

Alison Lundergan Grimes Running For Senate

Kentucky Secretary of State Alison Lundergan Grimes announced Monday that she would challenge Senate Minority Leader Mitch McConnell (R-Ky.) in 2014.

"I have met with supporters, we had a great conversation," she said at a press conference in Frankfort, Ky. "We can next make the best move, the best difference by running for the U.S. Senate."

Grimes is the first Democrat to mount a challenge against McConnell. Actress Ashley Judd had considered running against him, but ultimately decided not to.

A poll conducted by the Senate Majority PAC in late May showed Grimes and McConnell tied in a hypothetical matchup.

Even though he represents deep-red Kentucky, McConnell, a five-term senator, is very unpopular in the state. An April Public Policy polling survey showed him with a 36 percent favorability rating, while 54 percent disapproved of his job performance. In a January Courier-Journal/SurveyUSA poll, 34 percent of respondents said they would vote against McConnell no matter who runs against him.

McConnell immediately responded to the news in a statement. "Accepting the invitation from countless Washington liberals to become President Obama's Kentucky candidate was a courageous decision by Alison Lundergan Grimes and I look forward to a respectful exchange of ideas," he said. "The next sixteen months will provide a great opportunity for Kentuckians to contrast a liberal agenda that promotes a war on coal families and government rationed health care with someone who works everyday to protect Kentuckians from those bad ideas."

Guy Cecil, executive director of the Democratic Senatorial Campaign Committee, released a statement as well:

The Kentucky Senate race is now a toss up. Mitch McConnell is the most unpopular incumbent in the entire country. He is a relic of the past and a symbol of everything that is wrong with Washington. Kentuckians want a change. According to DSCC polling done by Fred Yang of Hart Research, McConnell’s job approval rating is net -27% with 62% of Kentucky voters disapproving of his job performance to just 35% approving. Just 28% of registered voters said they plan to vote to reelect McConnell.

July 02 2013 at 2:07 AM Report abuse +1 rate up rate down Reply
ddrakemd

reply-barkin.spiders
u go by bs for short, possibly; just thinking out loud. btw, always like K Rogers music, talented man, great voice. nice analogy, seriously, to his gamblers tune regarding investing in the market. four choices apply to most aspects of success, or failure- life, love, health, family, etc., and your right-on comment, the market. you did leave us hanging, though, likely by intent, on your current- near term action, inaction, or simply musing or conjecture on this fickle, and highly manipulated, market, impossible to predict, and extremely difficult to navigate in these high-frequency trading waters. an honest reply is requested, if you're agreeable. personally, I am, since early May, mostly holding, modified somewhat by prudent profit taking and cutting short some losses. I have balanced this with picking up an occasional position that has become undervalued in the craziness and volatility. overall, my account balances, incl.cash, are little changed during this time, except for a modest inrease my cash position, which was my goal, of course. I do value your opinion, as I feel that underneath the curtness of some of your comments, you are quite wise, and some of your insults, though directed at the individual, are for the entertainment, and sometimes, food for thought for the crowd. later, b.s

July 02 2013 at 12:55 AM Report abuse +1 rate up rate down Reply
ectullis

What stimulus programs?

July 02 2013 at 12:38 AM Report abuse rate up rate down Reply
TINKDAY

the stock market is no longer a accurate gauge on how the economy is really doing, it just shows how much tax payer money is going in to float the banks and the government.Than to pay for the continued bail out, SS, health care and money to the states is cut, now we have every county, city and state in the country, is raising taxes fees, tolls and adding more of all three. Also SS was fine until government started borrowing the extra since 1976 and probabley before. Why not tell the people how much has been borrowed out of SS by the government

July 01 2013 at 11:53 PM Report abuse rate up rate down Reply
1 reply to TINKDAY's comment
h.hughjardon

Wow...LBJ was the first to raid SS...and when was the stock market ever a good.barometer of how the economy is doing?

July 02 2013 at 12:24 AM Report abuse -3 rate up rate down Reply
ronfmiller

The observation that nobody has replied to this news shows how dumbed down as a society we've become. How long will we tolerate sluggish growth before the low information voters realize that our community agitator president's celebrity is wearing thin and he's really a loser.

July 01 2013 at 8:51 PM Report abuse -1 rate up rate down Reply
1 reply to ronfmiller's comment
pm0501

Good news day.... Buy! Hold on the rise, sell on the next bad news day. How hard is that?

July 01 2013 at 8:55 PM Report abuse rate up rate down Reply
paddleman1928

only in america can economic failure be turned into good news.

July 01 2013 at 8:46 PM Report abuse +1 rate up rate down Reply
thefacts22

The Market is absurd,the ONLY reason that we have not crashed is the Bond,"debt" buying from the feds

July 01 2013 at 5:10 PM Report abuse -4 rate up rate down Reply
2 replies to thefacts22's comment
comegetsomenowevan

it's coming

July 01 2013 at 5:59 PM Report abuse -7 rate up rate down Reply
paddleman1928

no, the only reason we have not crashed is because people are too frightened to admit how serious the problem is. We are living in a fantasy of denial-and it can't go on forever.

July 01 2013 at 8:48 PM Report abuse -1 rate up rate down Reply