Stocks build on upside

Stocks build on upside

NEW YORK (CBS.MW) – Stocks extended last week’s gains out of the gate
Monday as the Dow Industrials rose for a fourth straight session and the
Nasdaq climbed for a second trading day in a row.

On the economic plate, March personal income rose 0.5 percent vs.
expectations for a 0.4 percent climb, and personal consumption
expenditures, which gained 0.3 percent compared to the expected climb of
0.2 percent. and view Economic Preview and economic calendar and
forecasts.

The personal consumption expenditure deflator, which is used by the
government to adjust the figures for inflation, rose 0.3 percent in
March. The deflator rose at a 3.3 percent annual rate in the first
quarter.

The Dow Jones Industrial Average ($DJ) rose 36 points, or 0.3
percent, to 10,847.

The Nasdaq Composite ($COMPQ) swelled 33 points, or 1.6 percent, to
2,109 while the Nasdaq 100 Index ($NDX) spurted 37 points, or 2.1
percent, to 1,848.

The Standard & Poor’s 500 Index ($SPX) added 0.4 percent while
the Russell 2000 Index ($RUT) of small-capitalization stocks rose 0.3
percent.

"Most stocks have stopped going down. The market has gone up on
expanding volume and down on contracting volume — the textbook
definition of a sound uptrend. All of that will change before the market
runs into any real problems. Still, it’s hard to argue there’s any real
leadership in this rally. It’s not just that the new high list is
dominated by energy and financial stocks you’ve never heard of, the best
gains have been in stocks simply bouncing in downtrends," commented
Frank Gretz of Shields & Co.

Volume came in at 50.2 million on the NYSE and at 113 million on the
Nasdaq Stock Market. Market breadth was negative, with winners beating
out losers by 12 to 8 on the NYSE and by 18 to 9 on the Nasdaq.

Fund flow and earnings watch

U.S. equity funds took in an estimated $5.6 billion in the three days
ending April 26 for a monthly rate of $37.5 billion. For the
month-to-date, all equities had inflows at a monthly pace of $9.7
billion and with rallies on Thursday and Friday, flows during the
remainder of April should be positive, the fund flow tracker said.

Earnings compiler First Call/Thomson Financial notes that so far 81
percent of S&P 500 companies and 26 out of the Dow’s 30 stocks have
posted results.

First Call noted that there are no meaningful changes in the patterns
of negative pre-announcements and downward revisions in earnings
estimates as the first-quarter earnings season winds down. Since April
1, First Call said there have been 242 warnings for the second quarter.

Checking the sectors, First Call said the most troublesome patterns
continue to be the number and depth of downward revisions in fourth
quarter 2001 earnings estimates for the technology and basic materials
sectors. The most favorable trend remains in the contained number of
negative pre-announcements in consumer cyclicals.

Specific movers

Microsoft (MSFT) added 2.1 percent to $68.54. The software behemoth
denied reports that it was delaying the release of Windows XP.

Computer Associates (CA) saw its shares fall 8.1 percent, responding
negatively to a report in the Sunday New York Times that questioned
whether the company has used accounting tricks to consistently overstate
its revenue and earnings. The company scheduled a conference call Monday
to "address the erroneous statements."

Dollar General (DG) said it will restate fiscal 1998 and 1999 results
as it has become aware of certain accounting irregularities. The company
said it expects to reduce earnings by approximately 7 cents a share over
the stated three-year period but added that future earnings aren’t
expected to be materially affected, reaffirming its current full-year
earnings estimate of 71 to 73 cents a share.

Treasury focus

Treasury investors generally kept positions close to the vest, with
some modest downward pressure in the belly of the yield curve.

The 10-year Treasury note was off 7/32 to yield ($TNX) 5.365 percent
while the 30-year government bond added 1/32 to yield ($TYX) 5.805
percent.

In the currency arena, dollar/yen erased 0.2 percent to 123.70 while
euro/dollar shed 0.4 percent to 0.8874.