Trader Luigi Muccitelli, left, works Monday with specialist Allison Gamba on the floor of the New York Stock Exchange.
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Trader Luigi Muccitelli, left, works Monday with specialist Allison Gamba on the floor of the New York Stock Exchange.

Stocks stage late-day rally

By KEN SWEET

Associated Press

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NEW YORK — The stock market staged a late-day rally Monday, helping push the Dow Jones industrial average higher for the first time in a week.

Investors had a couple pieces of positive news to get behind: a decent earnings report from Berkshire Hathaway and the announcement of a rescue package for a struggling Portuguese bank.

However, investors remain cautious after last week’s sell-off, which gave the Standard & Poor’s 500 index its worst five-day period in more than two years.

“Everyone is double-checking their own portfolio after what happened last week,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

The Dow rose 75.91 points, or 0.5 percent, to 16,569.28. It’s the first time the blue chip index has posted a gain since July 28.

The Standard & Poor’s 500 index rose 13.84 points, or 0.7 percent, to 1,938.99 and the Nasdaq composite added 31.25 points, or 0.7 percent, to 4,383.89.

Berkshire Hathaway, the company run by Warren Buffett, helped give the market an early boost Monday.

The Omaha, Nebraska-based company reported late Friday a profit of $6.4 billion last quarter, helped by its insurance division Geico, which performed well above Wall Street’s expectations. Berkshire’s investment portfolio was also a big driver of profits. The company’s Class B stock rose $3.89, or 3 percent, to $129.70, one of the biggest gain in the S&P 500.

Michael Kors was the biggest decliner in the S&P 500, falling $4.82, or 6 percent, to $77.01. While the handbag and women’s fashion company reported a rise in second quarter earnings, the company’s profit margin shrank for the second consecutive quarter.

The news out of Portugal also helped the market.

Portugal’s central bank said late Sunday it would shore up Banco Espirito Santo, one of the country’s biggest financial institutions. Portugal’s PSI 20 index rose 1 percent on the news.

Portugal’s banking woes were one of many catalysts for last week’s market sell-off. While Portugal’s economy is small, strategists say that the eurozone’s economy is fragile enough that Portugal’s woes could spread. Europe just exited its latest recession a year ago, while the U.S. emerged from its last recession in 2009.

The tensions between Europe and Russia, the eurozone’s biggest trading partner, over the ongoing conflict in Ukraine only added to the problems facing the continent.

“These types of things are going to hurt the European economy and it couldn’t impact the region at a worse time,” Ablin said.

Last week’s market rout, where the S&P 500 fell nearly 3 percent in five days, remains front and center in investors’ minds. It was the worst week for the index since June 2012. With Monday’s gains, it was the Dow’s third positive day in the last 10 sessions.

“There does appear to be a little caution in the markets,” said Alpari analyst Craig Erlam. “Investors are a little concerned that the sell-off which started last week is not over and could lead to something much bigger.”

Utility stocks were among the biggest decliners. Consolidated Edison, PG&E and Duke Energy fell roughly 1 percent. The Dow Jones utility index, which includes 15 utility stocks, fell 1 percent.

Currency markets were flat. The dollar was steady at 102.56 yen and the euro held at $1.3422.

In energy trading, oil rose for the first day in a week. Benchmark U.S. crude oil rose 41 cents to $98.29 a barrel on the New York Mercantile Exchange.

Gold fell $5.90 to $1,287.70 an ounce and silver fell 14 cents to $20.23 an ounce. Copper rose three cents to $3.24 a pound.

The yield on the 10-year Treasury note was flat at 2.49 percent.

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