Stocks Rise on Quarter's Final Day
Monday March 31, 7:42 pm ET
By Tim Paradis, AP Business Writer
Stocks Rise to Finish Weak First Quarter; Chicago PMI Tops Wall
Street's Forecast
NEW YORK (AP) -- Wall Street managed a moderate gain in the final session of
a dismal first quarter Monday, but stock prices and the major indexes still
ended the first three months of 2008 with massive losses, the casualties of the
still continuing credit crisis. The Standard & Poor's 500 index, the benchmark
for many widely held investments such as mutual funds, suffered a loss for the
quarter of nearly 10 percent.
It was the worst quarter for the major indexes since the third
quarter of 2002, when Wall Street was approaching the lowest point of a
protracted bear market.
The blip upward came from a better-than-expected reading in the Chicago
Purchasing Managers Index, which is considered a precursor to the Institute for
Supply Management's manufacturing survey on Tuesday. The index rose to 48.2 in
March from 44.5 a month earlier; economists had been expecting a reading of
47.3, according to Dow Jones Newswires. Though the number topped forecasts, a
figure below 50 nonetheless indicates a contraction in manufacturing activity.
The market's reaction, however, was likely not as enthusiastic as it might
seem from Monday's gains by the major indexes. Volume was light, which tends to
skew price movements.
It was a difficult quarter on Wall Street, with financial companies' ongoing
credit market losses and the flagging economy wiping out many investors'
appetite for stocks. While the market saw a number of up days during the
quarter, the overall trend was sharply lower, with reports of asset write-downs
and shaky financial companies pummeling the market -- in particular, the
near-collapse of Bear Stearns Cos. in mid-March.
Investors didn't show a strong reaction Monday to a government plan to
overhaul the way Wall Street is regulated. The 218-page plan would give the
Federal Reserve increased power to protect the stability of the entire
financial system while merging day-to-day supervision of banks into one agency,
down from five under the existing system.
Scott Wren, senior equity strategist for A.G. Edwards & Sons, said many
investors appeared to be focused on economic data due this week on the
manufacturing and service sectors as well as employment. Investors are prepared
for weak economic data, he said, but could become unnerved if there is
unwelcome corporate news.
"The market is already pricing in a ton of bad economic news. Bad economic
news is not going to drive the market. What's going to drive the market is
headline news," he said.
On the last day of the quarter, the Dow Jones industrial average rose 46.49,
or 0.38 percent, to 12,262.89.
Broader stock indicators also rose. The S&P 500 index advanced 7.48, or 0.57
percent, to 1,322.70, and the Nasdaq composite index rose 17.92, or 0.79
percent, to 2,279.10.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock
Exchange, where consolidated volume came to 4.02 billion shares compared with
3.59 billion shares traded Friday.
When investors open their quarterly brokerage account or 401(k) statements,
what they see will be painful. For the quarter, the Dow fell 7.55 percent, the
victim of a series of triple-digit plunges. The S&P 500 declined 9.92 percent,
while the Nasdaq, whose smaller company stocks are seen as more vulnerable to
economic problems, fell 14.07 percent.
The quarterly performance was the worst since the July-September period of
2002, when the aftermath of the dot-com bust, recession, the 9/11 terror
attacks and corporate wrongdoing combined to send stocks spiraling downward. At
that time, the Dow lost more than 16 percent, the S&P 500 tumbled nearly 18
percent and the Nasdaq fell almost 20 percent.
Many analysts have suggested that the market has been seeking a bottom in
recent weeks. But it will take some time -- and a long period of at least
stable trading -- before anyone can feel secure that Wall Street is ready to
resume an upward track.
One reason for the uneasiness is that many on Wall Street expected the first
quarter to be much stronger for stocks than it turned out to be. The theory was
that big financial firms had taken their hits in the final three months of
2007. However, as the first quarter has shown, the fallout from investments in
risky and possibly worthless mortgage-backed securities has continued along
with the uncertainty in the credit markets.
The Fed, with a series of interest rate cuts and steps to make more credit
available to banks and investment houses, helped restore some sense of calm to
the Street. However, worries about recession and the health of consumers have
also undermined the market's attempts to recover, and as recently as last week,
bad economic news sent stocks tumbling.
The dollar was mixed against other major currencies, while light, sweet crude
fell $4.04 to settle at $101.58 on the New York Mercantile Exchange. Gold fell
$14.40 to finish at $916.20 an ounce on the Nymex.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which
moves opposite its price, fell to 3.42 percent from 3.45 percent late Friday.
Merck & Co. fell $6.56, or 15 percent, to $37.95 and Schering-Plough Inc.
declined $5.06, or 26 percent, to $14.41 after medical researchers said the
companies' joint cholesterol drug, Vytorin, failed to improve heart disease.
The researchers' findings, published by the New England Journal of Medicine,
urged a return to more established treatments for cholesterol. Merck is one of
the 30 stocks that comprise the Dow industrials and, as a result, dragged on
the blue chips.
Citigroup Inc. rose 59 cents, or 2.8 percent, to $21.42 after announcing
plans to split its consumer banking unit from its credit card business as part
of a broader reorganization to cut costs and simplify the large financial
institution's structure. The company suffered billions of dollars in losses
from investments in poor-quality mortgages.
The Russell 2000 index of smaller companies rose 4.79, or 0.70 percent, to
687.97.
Overseas, Japan's Nikkei stock average fell 2.30 percent. Britain's FTSE 100
closed up 0.16 percent, Germany's DAX index fell 0.38 percent, and France's
CAC-40 rose 0.24 percent
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