NEW YORK- U.S. stocks rose on Monday
after another round of solid economic reports, but pulled off
session highs after a Fed official's warning about banks' loan
losses.
The three major indexes had previously risen about 1
percent earlier in the session as stronger-than-expected data
on manufacturing and pending home sales spurred a broad-based
advance and soothed worries over the recovery's strength.
Industrial and materials stocks rose after the solid
numbers on manufacturing activity, with the S&P Industrials
index and the S&P Materials index both rising 1 percent.
However, a Federal Reserve official's critical comments
about banks' potential losses on commercial real estate loans
caused investors to sell some financial shares. Stocks still
managed to close the session with solid gains, but could not
maintain earlier momentum.
"The market has turned from buying on dips to selling on
rallies," said Terry Morris, senior vice president and senior
equity manager for National Penn Investors Trust Company in
Reading, Pennsylvania.
Ford Motor Co shares jumped 8.3 percent to $7.58 after the
automaker posted a quarterly profit, topping Wall Street's
estimates for a loss as it cut costs and gained market share,
prompting it to boost its 2011 outlook to "solidly profitable"
from break-even.
In testimony on Monday, Jon Greenlee, the associate
director of the Fed's Division of Banking Supervision and
Regulation, said U.S. banks are at risk for sizable new loan
losses, particularly on commercial property, and some banks
may not have enough capital to fully cushion against
setbacks.
On Tuesday, the Federal Reserve is set to begin its
two-day policy meeting.
The KBW Banks index rose 0.9 percent, well off its earlier
high that had driven it up more than 3 percent. Citigroup Incshares fell 2.4 percent to $3.99.
The Dow Jones industrial average gained 76.71 points, or
0.79 percent, to end at 9,789.44. The Standard & Poor's 500
Index climbed 6.69 points, or 0.65 percent, to 1,042.88. The
Nasdaq Composite Index added 4.09 points, or 0.20 percent, to
2,049.20.
The S&P 500 is up more than 52 percent since its 12-year
closing low on March 9. But the S&P has shown signs of slowing
recently and has struggled to maintain rallies, posting
declines in the past two weeks.
The Nasdaq eked out a slim gain, weighed down by a 5.1
percent drop in the stock of BlackBerry maker Research In
Motion. The stock finished at $55.74, down $2.99. It limited
the Nasdaq's gains after an analyst told investors to sell the
stock because of increasing competition from other smart phone
makers.