Stocks hold onto slight gains as likelihood of imminent Syria attack wanes

9/3/2013

NEW YORK — The stock market held onto early gains today as worries of an imminent U.S. attack on Syria faded.

Stocks surged in the opening minutes of trading, but their advance slowed at midday in the first day of trading since President Barack Obama announced he would seek congressional approval for a military strike against Syria.

Many had expected Obama to order strikes immediately and independently of Congress, but on Saturday he said that he would put a vote before lawmakers.

“There’s a little bit of relief that any Syrian attack has been pushed out.” said Alec Young, a global equity strategist at S&P Capital IQ. “The odds of an imminent attack have gone down.”

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Stocks also got a boost from a report that showed a strengthening manufacturing sector.

U.S. factories expanded last month at the fastest pace since June 2011 on a jump in orders.

The Dow Jones industrial average was up rose 18 points, or 0.1 percent, to 14,829 as of 11:53 a.m. Eastern Daylight Time. The Standard & Poor’s 500 index gained 8 points, or 0.5 percent, to 1,641. The Nasdaq composite climbed 27 points, or 0.8 percent, to 3,616.

Stocks surged when the market opened. The Dow rose as much 123 points while the Standard & Poor’s 500 index climbed 18 points.

In corporate news, shares of CBS surged $2.15, or 4.2 percent, to $53.26 after the TV network and Time Warner Cable reached an agreement that ended a blackout of CBS and CBS-owned channels on the cable provider.

Microsoft fell $2.07, or 6 percent, to $31.36 after the software company said it would pay $7.2 billion to acquire Nokia’s line-up of smartphones and a portfolio of patents and services. Microsoft is struggling to capture a slice of the lucrative mobile computing market that is dominated by Apple and Google.

In other deal news, Verizon fell $1.23, or 2.6 percent, to $46.16 after the company agreed to pay $130 billion for the 45 percent stake in Verizon Wireless owned by British cellphone carrier Vodafone.

Any stock market rally may be short lived when investors focus on what lies, said Randy Frederick, managing director of active trading and derivatives at the Schwab Center for Financial Research.

The S&P logged its worst month in over a year as investors fretted about when the Federal Reserve will cut its economic stimulus. The Fed’s September meeting is when many on Wall Street think the central bank will begin winding down its massive bond-buying program.

Lawmakers in Washington may also throw investors a curveball.

To keep the government running, Congress needs to pass a short-term spending bill before the fiscal year starts Oct. 1. And then there’s the government’s $16.7 trillion borrowing limit. Treasury Secretary Jacob Lew warned that, unless it’s raised soon, the government would lose the ability to pay all its bills by the middle of October.

Political wrangling in Washington shook financial markets in August 2011 when lawmakers fought over raising the debt ceiling. That lead the rating agency Standard & Poor’s to strip the U.S. of its top, AAA credit rating.

“All these catalysts out there.....are still there,” said Frederick. “There’s just not enough upside catalysts, and there’s plenty of downside catalysts.”

September has often been a losing month for the stock market, making some investors wary. Since 1945, the Standard & Poor’s 500 index has slumped nearly six out of every 10 Septembers, with an average loss of 0.6 percent.

In government bond trading, the yield on the 10-year Treasury note surged to 2.90 percent from 2.79 percent Friday. The note is at its highest since July 2011.

In commodities trading, the price of oil rose 39 cents, or 0.4 percent, to $108.02. The price of gold was up $10.80, or 0.8 percent, $1,407.

Before U.S. markets opened, stocks in Asia and Europe rallied after two surveys that showed China’s manufacturing industry improved last month after prolonged weakness.