Wall Street Surges on Construction News

Wall Street surged higher Monday after a government report showed a rise in construction spending, and a Federal Reserve policy maker suggested interest rates could stay low for some time.

In morning trading, the Dow Jones industrial average was up 71.26, or 0.7 percent, at 10,481.11. The broader gauges were also higher. The Nasdaq composite index was up 23.19, or 1.2 percent, at 2,029.87. The Standard & Poor’s 500 index was up 7.95, or 0.7 percent, at 1,116.43.

The Commerce Department reported that construction spending rose by 1.2 percent in November to a seasonally adjusted annual rate of $934.5 billion. It marked the fifth-straight month the annual rate has set a record, reflecting a building boom generated by the lowest interest rates in more than four decades.

Investors and traders were also encouraged by remarks from Fed governor Ben Bernanke on Sunday that the policy group had room to leave interest rates at rock-bottom levels for the near future. The federal funds rate, the Fed’s main lever for influencing economic activity, now stands at 1 percent, a 45-year low.

Unemployment remains a concern, but inflation remains in check and many forecasters estimate the economy will grow at a brisk 4 percent this year, a rate Bernanke said was reasonable.

General Motors Corp. rose 74 cents to $54.38, and Ford Motor Co. gained 45 cents to $16.53, as they and other automakers prepared to report December sales. Analysts said 2003 could be among the top five years on record for auto sales, but the lowest since 1998.

Industrial manufacturer Vulcan Materials was up $2.90 at $50.11 after forecasting better than expected 2003 results, citing stronger shipments in its construction materials division and improved results in chemicals.

Walgreen Co. was down $1.00 at $34.71 after posting a 10 percent increase in first-quarter profits, but saying its gross profit margins had decreased slightly from a year ago.

Drug maker Eli Lilly & Co. was down 46 cents at $70.78 after saying it expects a substantial one-time charge for merger-related costs in the first quarter of 2004.

Advancing issues outnumbered decliners 4 to 1 on the New York Stock Exchange. Volume was at 189.77 million shares, compared with 130.82 million shares traded at the same point Friday.

The Russell 2000 index, which tracks smaller company stocks, was up 5.13, or 0.9 percent, at 565.98.

Overseas, Japan’s Nikkei stock average finished 1.4 percent higher Monday. In Europe, France’s CAC-40 gained 0.1 percent, Britain’s FTSE 100 lost 0.02 percent and Germany’s DAX index was up 0.3 percent.

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