Dow Jumps Again on Weak Economic Data
After stocks imploded in late trading on Friday, investors opened June undeterred, sending the Dow Jones Industrial Average up 138 points, or 0.9%. The gains came from hopes that the Fed would hold back plans to cut its stimulus program because of two weak economic reports today, a pattern we saw last Thursday as well. The Institute of Supply Management said its manufacturing index dropped from 50.7 in April to 49.0 in May, indicating a contraction to its level since June 2009 and well below expectations of 50.9. Construction spending for April also grew less than expected, coming in at 0.4% on projections of a 1.1% increase.
Still, concerns about the Fed have dominated investor mentality recently since the most recent Fed minutes were released on May 22, and the market bizarrely seems to be hoping for bad news to stave off the eventual winding down of the bond-buying program.
Intel also helped propel the Dow higher today as the chip maker gained 4% after Samsung said it would use Intel processors in a new model of one of its top-selling tablets, which will come out later this month. The announcement marks the first time that Intel chips will be used in a major tablet, and helps assuage investor concerns that Intel will have trouble prospering as the PC market declines further.
Another stock pushing the Dow higher today was Merck , which jumped 3.8% after revealing positive results in a new melanoma study that said its new drug, lambolizumab, shrunk the tumors of 38% of patients with the late-stage form of the skin cancer and 52% of patients who received the highest dosage of the drug. One analyst said the drug may be able to do $5 billion sales. Rival Bristol-Myers Squibb also gained 3.4% as it demonstrated its own potent combination for treating melanoma.
Outside the Dow, General Motors gained 1.6% during regular trading and then 3.2% after hours on a strong May auto sales report and word that it would rejoin the S&P 500, replacing Heinz, which was bought out by Warren Buffett's Berkshire Hathaway.AIG will also rejoin the index, another important step into the two companies' rehabilitation from its financial crisis bailouts. Overall, auto sales jumped 8% from a year ago to an annualized rate of 15.3 million. Pick-up trucks led the way as GM had more than a 20% gain in the category.
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The article Dow Jumps Again on Weak Economic Data originally appeared on Fool.com.Fool contributor Jeremy Bowman owns shares of General Motors. The Motley Fool recommends General Motors. It recommends and owns shares of Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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