msnbc.com news services
updated 3/29/2005 9:30:48 AM ET 2005-03-29T14:30:48

Wall Street enjoyed a modest rebound Monday after three weeks of losses, advancing as investors felt more optimistic about the economy and indulged in a little profit-taking. Falling crude oil prices and a strengthening U.S. dollar also spurred some buying.

Major Market Indices

While Dow Jones industrials members American International Group Inc. and General Motors Corp. suffered from a new round of bad news, an $11.3 billion leveraged buyout of SunGard Data Systems Inc. showed that a recent spate of merger and acquisition activity is likely to continue.

The economy, however, was foremost on investors’ minds. There was no significant economic data released Monday, so the market was anxiously awaiting gross domestic product and employment numbers later in the week and hoping they would show the economy has enough strength to overcome inflation.

“Investors are cautiously putting a foot back into the market,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC. “The market appears to be oversold, but investors are going to need some sort of catalyst, whether it’s falling oil prices or earnings or some of the economic data coming out this week, to really have the confidence to push things higher.”

The Dow Jones industrial average was up 42.78 points, or 0.4 percent, at Monday’s closing bell, while the broader Standard & Poor’s 500-stock index was up 2.86 points, or 0.2 percent. The Nasdaq composite index advanced 1.46 points, or 0.1 percent.

Investors were also cheered as the U.S. dollar gained ground against most major currencies, including the euro and the Japanese yen. Crude oil futures continued their slow retreat, with a barrel of light crude settling at $54.05, down 79 cents on the New York Mercantile Exchange.

“Oil is a little bit weaker today, so obviously we’re back to the Texas two-step, where oil falls and stocks rise,” John Caldwell, chief investment strategist at McDonald Financial Group, said. “Also, we’re coming off three straight weeks of declines for the major indexes, so people are starting to see some value.”

Analysts also noted that Monday’s move up came on very light volume, and the advance-decline lines showed decliners slightly ahead. And while the energy sector continued to lead the market for 2005, it was the worst performer of the month so far, despite record crude oil prices.

“Take that into consideration and you’re looking at a very short-term, leaderless kind of selling reprieve, more than anything else,” said Brian Belski, market strategist at Piper Jaffray. “People aren’t jumping up and down to get back in to this market. They’re going to want to see a few days of solid upside and some real leadership from any sector, really, before they get back in.”

The Nasdaq Stock Market said Monday it will launch a new service that lets users of its system trade New York Stock Exchange-listed shares on the Nasdaq market. The service is set for launch in April, pending approval by the U.S. Securities and Exchanges Commission, and appears part of a renewed push to compete more aggressively with the NYSE, its largest rival.

SunGard Data Systems Inc. rose $2.81, or 8.9 percent, to $34.36, after the company announced it would be purchased by a consortium of seven private equity groups. The move was expected, though the $5 premium over Thursday’s closing stock price was not.

General Motors was downgraded to “reduce” from “neutral” by UBS due to concerns over the automaker’s liquidity and questions about whether the company could continue offering dividends to its shareholders. GM slipped 93 cents to $28.37.

American International Group climbed $1.41 to $57.02 after The Wall Street Journal reported online that the company would sever ties with former Chairman Maurice “Hank” Greenberg. The news came as the Securities and Exchange Commission reportedly subpoenaed as many as 12 AIG executives. State and federal regulators are investigating whether AIG used questionable insurance transactions to illegally bolster its earnings reports.

Pharmaceutical services company AmerisourceBergen Corp. tumbled $7.08, or 11.6 percent, to $54.03, after it lowered its earnings forecasts for the quarter and the year. The company blamed lower inventory levels maintained by its customers for the expected shortfalls.

Drug store chain Walgreen Co. saw its sales rise 12.5 percent for its second quarter, but the company missed Wall Street’s profit forecasts by a penny per share. Walgreen lost $1.12 to $45.11.

Overseas, Japan’s Nikkei stock average rose 0.27 percent. European markets were closed for the Easter holiday.

Reuters and the Associated Press contributed to this report.

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