Stocks strode higher Tuesday, rallying along with insurance stocks on Marsh & McLennan Cos. Inc.’s decision to fire its chief executive in the face of an ongoing probe. Relief that the investigation would not result in criminal charges against the company offset higher oil prices and a disappointing report on U.S. consumer confidence.
The Dow Jones industrial average rallied 138.49 points, or 1.4 percent, to 9,888.48, while the broader Standard & Poor’s 500-stock index rose 16.29 points, or 1.5 percent, to 1,111.09. The technology-rich Nasdaq composite index gained 14.75 points, or 0.8 percent, and closed at 1,928.79.
Analysts attributed at least some of the day’s trading to bargain hunting, as October winds to a close, marking the end of the fiscal year for many mutual funds — a time when managers reposition themselves and make new bets. This was reflected in improved performance in some beaten down sectors, including financials, health care and pharmaceuticals.
“I would say half of it is relief over the insurance stocks and the other half is end-of-October bargain hunting. People want to sell their losers and ride the winners,” said Matt Kelmon, portfolio manager of the Kelmoore Strategy Funds. “Then on the other side, there are people not wanting to make any decisions ahead of the election.”
Worries about job prospects drove consumer confidence lower for a third consecutive month, according to the latest reading by the Conference Board. The 3.9-point slide in the group’s Consumer Confidence Index was steeper than expected, bringing the reading to 92.8; analysts had expected a 94. The drop raised questions about how robust spending is likely to be during the critical holiday shopping season.
Uncomfortably high energy prices are another potential pressure on consumer spending, and there was little relief in sight Tuesday. Light, sweet crude futures settled 63 cents higher at $55.17 on the New York Mercantile Exchange.
“Pick your uncertainty. You have oil. You have elections. We need to pop some of these bubbles of uncertainty before we can go anywhere,” said Bill Groenveld, head trader for vFinance Investments. “But look at how we’ve held in despite all this stuff. We got a strong market once you move these things out of the way.”
The insurance sector got a boost after Marsh & McLennan replaced its chief executive and announced a series of reforms in hopes of appeasing New York Attorney General Eliot Spitzer, who is in the midst of a bid-rigging investigation of the company.
Marsh & McLennan shares climbed $2.45, or 9.3 percent, to $28.87, on news that Spitzer did not plan to pursue criminal action against the company, but might press charges against individuals instead. Other insurers rallied on the belief that this reduces the likelihood other companies would be charged in the probe. American International Group rose $4.23, or 7.5 percent, to $60.33.
Strong earnings from Lockheed Martin Corp. and Halliburton Co., along with a strong profit outlook from General Electric Co., cheered many investors, though Dow component DuPont Co. fell despite a credible third-quarter performance.
Lockheed Martin added 88 cents to $54.38 as its growing information technology business offset a slumping space division, helping the company post a 41 percent jump in earnings. The aerospace giant, which beat analysts’ forecasts by 4 cents per share, issued a tepid full-year outlook, however.
General Electric gained 73 cents to $33.63 as it backed Wall Street’s view of its fourth-quarter and full-year profit forecasts, citing strength across the conglomerate’s various divisions.
Halliburton added $1.38, or 4 percent, to $35.73, even as the company swung to a loss, weighed down by continued asbestos claims settlements. Without the one-time losses, the company would have exceeded profit forecasts by 6 cents per share.
DuPont fell 78 cents to $41.40 after the chemical company swung to a profit in the third quarter despite higher raw materials costs. DuPont, which beat Wall Street expectations by a penny per share, also reiterated its full-year profit outlook, though some investors worried that materials and energy costs would eventually sap the company’s profits.
U.S. Steel Corp. finished up $1.60, or 4.5 percent, at $37.45, after returning to profitability in the third quarter, blowing past Wall Street profit forecasts by 58 cents per share thanks to higher demand. The company also said it expects a strong fourth quarter.
Overseas, Japan’s Nikkei stock average rose 0.12 percent. In Europe, France’s CAC-40 climbed 0.29 percent, Britain’s FTSE 100 closed up 0.41 percent, and Germany’s DAX index gained 0.20 percent.