Stocks advanced on this first day of March, led by technology stocks after an encouraging report on chip sales and strong outlook from SanDisk. Some M&A activity gave the broader market a boost.
The Dow Jones Industrial Average gained 78.53, or 0.8 percent, to close at 10,403.79, led by Intel and Hewlett-Packard.
JPMorgan, Wal-Mart and GE were at the bottom of the Dow pack.
The tech-heavy Nasdaq jumped 1.6 percent, while the S&P 500added 1 percent. The CBOE volatility indexdropped back below 20.
This came after stocks gained 3 percent in Februarybut the rally faded in that last week of the month.
Chip sales rose 0.3 percent in January from December but were up a whopping 47 percent compared to the same period a year ago, the Semiconductor Industry Association reported. The group also said 2010 sales may come in above expectations, though it stressed that it's all dependent on the recovery in consumer spending.
SanDisk led gainers on the Nasdaq 100, surging 12 percent, after the flash-memory maker raised its revenue forecast and said the outlook for the industry in the next few years is strong.
The ISM reported that the manufacturing sector continued to grow in February, even though it fell to 56.5 from 58.4 in January, as the gauge remained over 50. Plus, the employment index rose sharply. Separately, construction spending fell for a third straight monthin January to its lowest level since June 2003.
The encouraging reports out of tech and manufacturing are the latest sign that the business recovery is underway.
Concerns have been growing about the consumer recovery but some good news on the consumer front today: Personal spending rose 0.5 percentin January, even though income gained only 0.1 percent. Economists had expected both numbers to reflect 0.4 percent gains.
Spending on both durable and nondurable goods was strong, Ian Shepherdson of High Frequency Economics pointed out in a note this morning, adding that even if real spending is unchanged in February, the quarterly increase will still be about 2.2 percent — maybe even 2.5 percent. Still, with weak consumer confidence data, there are concerns about the consumer going forward, Shepherdson said.
Even Warren Buffett mentioned consumers at the Berkshire Hathaway annual shareholder meeting on Saturday, saying weakness in consumer spending could last "quite a long time."
Buffett struck a positive note in his annual letter to shareholders. He reported that Berkshire Hathaway's earnings jumped 61 percent in 2009 and its book value surged 20 percent to record high as the company did some bargain hunting and some bets that paid off, including GE and Goldman Sachs. He also offered some classic Buffett advice: "When it's raining gold, reach for a bucket, not a thimble."
The dollar advancedagainst the euro as uncertainty about the Greek bailout remained. Oil settled below $79 a barreland gold settled around $1,117 an ounce.
Copper prices hit a five-week highas the massive earthquake that hit Chile, the No. 1 copper-producing nation, over the weekend halted 20 percent of its output.
On the M&A front: AIGhas agreed to sell its Asian life insurance unit to the UK's Prudential for about $35.5 billion, a transaction which will help AIG pay back some of the government's bailout money.
And Milliporeagreed to the takeover offer from Germany's Merck (no relation to the U.S. company of the same name) for about $6 billion in cash.
In news that does involve Dow component Merck , AstraZeneca said it plays to exercise an option to buy rights to Entocort, Atacand and Plendil and several other products under development. AstraZeneca said it plans to exercise the option in April.
US-traded shares of HSBC skidded after the bank reported a $7 billion profit but missed expectations.
Shares of the New York Times jumped over 7 percent amid speculation that Mexican billionaire Carlos Slim planned to buy the rest of the paper he didn't already own. Slim denied the rumor was true.
Toyota CEO Akio Toyoda is in China to meet with officials and the media, as he seeks to ease quality concerns following the massive recalls of Toyota vehicles.
Volume was light, with just 7.57 billion shares changing hands on the three major exchanges, more than 2 billion less than last year's daily average. Advancers outpaced decliners, roughly 4 to 1.
On the Calendar:
TUESDAY: Obama town hall; auto sales; Fed's Kocherlakota speaks; Earnings from AutoZone, Staples
WEDNESDAY: Weekly mortgage applications; Challenger, ADP jobs reports; Fed's Fisher, Lockhart speak; ISM services; weekly crude inventories; Fed's beige book; earnings from BJ's and Costco
THURSDAY: Citi's Pandit testifies at COP hearing; retailers report chain-store sales; BOE, ECB rate decisions; weekly jobless claims; pending-home sales; factory orders; Fed's Bullard, Evans speak; Earnings from Anheuser-Busch and Marvell Tech
FRIDAY: February jobs report; consumer credit
Send comments to cindy.perman@nbcuni.com.
