By Dow Jones Business News,
August 11, 2014, 04:08:00 PM EDT
By Anora Mahmudova and Carla Mozee, MarketWatch
MannKind leaps, Dean Foods slumps
NEW YORK (MarketWatch) -- U.S. stocks advanced Monday, led by a rally in small-cap companies, though continued
tensions in Ukraine and the Middle East put a cap on the S&P 500's gains.
The Russell 2000 (RUT) rose 10 points, or 0.9%, to the preliminary 1,141.58. The index of small companies has
outperformed the large-cap S&P 500 in the five of the past six sessions, and many analysts see the leadership of small
stocks as a sign of improving markets.
The S&P 500 (SPX) rose 5.32 points, or 0.3%, to 1,936.91, Consumer staples and technology stocks lead the gains.
The Dow Jones Industrial Average (DJI) gained as much as 75 points in the morning, but pared gains in the afternoon.
The blue-chip index closed 16.05 points, or 0.1%, higher at 16,569.98.
The Nasdaq Composite (RIXF) ended the day up 30.43 points, or 0.7%, at 4,401.33.
Monday's rally is being described as a relief rally after a selloff during the previous two weeks. The near-4%
pullback on the S&P 500 began as investors fretted the Fed might raise rates sooner than expected in light of recent
economic data that were stronger than expected.
Jay Feuerstein, managing director of alternative strategies at money manager Manning & Napier, says Wall Street is
worrying unnecessarily. "The Fed under Janet Yellen wants to see a much stronger labor market improvement before raising
rates and will tolerate a rise in inflation to aid the economy," he said.
He said low rates and the improving economy make equities attractive.
"When dividends are yielding higher than 10-year Treasurys, equities will continue to outperform, and we expect a big
rally in the fourth quarter," he added.
Among geopolitical worries, the situation in Iraq remained fluid ,with air strikes slowing the advance of the militant
group ISIS. But chaos ensued in Bagdad following an appointment of a new prime minister by the president.
Meanwhile, Russia announced it would send a humanitarian convoy into Eastern Ukraine. That could put a temporary stop
to gunfights between the Ukrainian forces and rebels in the region.
Shares of Mannkind ( MNKD ) rallied 4.6% after the company reached a licensing deal with Sanofi ( SNY ) to develop and
sell inhaled insulin drug Afreeza in the U.S.
Shares of Tesla Motors Inc.(TSLA) rallied 4.6% after an upgrade to buy from Deutsche Bank. The bank also increased
its price target on the stock to $310, from $220 a share.
Shares of Dean Foods ( DF ) slumped 3.9% after the milk and food company reported a wider-than-expected loss and
withdrew its full-year outlook.
Kinder Morgan ( KMI ) jumped 8.8% following plans to consolidate its oil-and-gas pipeline empire into a single company
in a $44 billion deal. (Read more about the day's notable movers here: http://www.marketwatch.com/story/priceline-and-
In other markets, 10-year Treasury yields (10_YEAR) rose. Oil futures (CLU4) posted minor gains, but gold futures
(GCZ4) retreated. European stocks rose following last week's losses, and Asian shares advanced, with Japan's Nikkei
Average up 2.4%.
More must-reads from MarketWatch:
10 stocks with the biggest cuts in earnings estimates
Can J.C. Penney stay on the comeback trail?
Why small-cap stocks will likely feel the most pain
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