The Dow Jones industrial average leapt 117 points Monday, recording its second triple-digit gain in three sessions, as investors looked ahead optimistically to Friday’s employment report for the month of March, which some investors hope will show solid job growth after three straight months of disappointing data.
Market analysts also said stocks were rebounding from technical low levels seen last week, which presented investors with an opportunity to buy shares beaten down to fresh 2004 lows. A dip in the price of crude oil, which hit a near 13-year high last week, also encouraged investors to snap up beaten-down stocks.
“I think we’re seeing a combination of a continuation of last week’s technical rebound and some window dressing,” said Peter Cardillo, chief strategist at New York brokerage S.W. Bach, referring to the portfolio managers’ end-of-quarter practice of shuffling their stock holdings, which can cause stock market volatility.
“There’s some anticipation of the jobs number on Friday too,” Cardillo continued. "I think we’ll see a nice jump in job creation this week, but I’m not sure we’ll see what the market’s anticipating. There’s talk of a number above 200,000 and I don’t think that will be the case. It’s looking more like 125,000,” he added.
The Dow rallied over 100 points in the first hour of trading and held on to a triple-digit gain for most of the day, closing up 116.66 points, or 1.1 percent, boosted by strength in blue-chip names like Hewlett-Packard, Caterpillar, Citigroup and McDonald's.
Broader stock indices also rallied. The Standard & Poor’s 500-stock index rose 14.41 points, or 1.3 percent, and the Nasdaq composite index, full of technology stocks, rallied 32.55 points, or 1.7 percent.
Underpinning Monday’s rally was positive analyst commentary on several blue-chip companies, strength in the semiconductor sector and a sense that the recent stock market correction has run its course.
A lack of any worrisome geopolitical news, which has weighed on Wall Street in recent weeks, was another driver of Monday’s rally said Brian Pears, head of equity trading at Victory Capital Management in Cleveland, in a CNBC interview.
Some Wall Street analysts like Jeff Kleintop, chief investment strategist for PNC Financial Services Group, are cautiously optimistic that the market may have pulled out of its recent slump, at least for the short term.
“We had a pretty significant discount introduced into the market due to the terrorism concerns,” Kleintop said. “The more we can put that behind us, the better off we’ll be.”
Investor frustration over a weak February jobs report one month ago triggered a pull-back in stock prices that dragged the broader stock market down just over 4 percent in what some on Wall Street called a much-needed correction after a near yearlong rally that has driven the index up over 40 percent.
Now some professional investors like Liz Ann Sonders, chief investment strategist at Charles Schwab, expect strength in first-quarter earnings season, which begins in about a week, to be the catalyst that drives stock prices higher again. “I think we’re setting ourselves up for a nice rally in earnings season,” she told CNBC.
The release of the government's March payrolls report, not due until Friday morning, is expected to be the main economic event on Wall Street this week, particularly as questions have surfaced recently about the sustainability of the economy's current rebound from recession.
A consensus of Wall Street analysts polled by Reuters expects this Friday’s payrolls report to show 103,000 jobs were added to U.S. payrolls in March after February's rise of only 21,000 jobs. The nation’s unemployment rate is expected to hold at 5.6 percent.
Investors were encouraged Monday by the continued slide in the price of oil. Ministers of the Organization of Petroleum Exporting Countries (OPEC) meet this Wednesday to decide whether to move ahead with a planned output cut of a million barrels a day beginning April 1.
A number of positive earnings estimates from investment firms lifted individual stocks.
Shares of heavy equipment maker Caterpillar, a Dow component, rose 2.6 percent to $79.48, and financial giant Citigroup rose 2.5 percent to $51.32. A positive Barron’s article lifted Hewlett-Packard share price 3.6 percent to $23.17.
Biotech firm Amgen's stock rose 2.5 percent to $59.55 after it said it would buy the outstanding shares of pharmaceutical company Tularik for $1.3 billion. Amgen already owns 21 percent of Tularik, which saw its shares jump 44.3 percent to $24.53.
Overseas, Japan’s benchmark Nikkei stock average fell 0.5 percent. In Europe, Britain’s FTSE 100 rose 1.1 percent, Germany’s DAX index gained 1.5 percent and France’s CAC-40 closed up 1.2 percent.
Reuters and the AP contributed to this report