Dow has 3rd day of gains in triple digits

July 27, 2010 at 12:00a.m.

Associated Press

NEW YORK

The Dow Jones industrial average gained more than 100 points for the third-straight day Monday after traders got some unexpected good news about the economy.

A report on the housing market came in better than traders anticipated. And shipping giant FedEx Corp. released a forecast that was more upbeat than the prediction it made just six weeks ago.

The news pulled stocks out of a slow start and sent the Dow up 100 points by the close for a three-day gain of 405. Traders who a week ago were selling on a pessimistic view of companies’ earnings and the economy are now buying on the belief that the economic recovery, while slow, is proceeding.

The Dow has closed higher in 12 of 17 trading days this month. Its latest advance means the average is up 7.7 percent in July after falling 10 percent from April through June on a stream of bad economic news. The Dow also is up 0.9 percent for the year. The broader Standard & Poor’s 500 index is still showing a loss for 2010, but barely. It’s down less than 0.01 percent.

Trading volume was light Monday, a sign that traders might be a little cautious despite the gains. Many likely are waiting for hundreds of earnings reports to be released this week before they make any major investing decisions.

But FedEx gave traders reason to buy when it said its overnight and ground delivery businesses are doing better than expected and that it expects a moderate global economic recovery. That was heartening news because the shipping giant, which carries packages for businesses and consumers, is considered a barometer for how the economy is doing.

The shipping company raised its earnings forecast for the three months that will end Aug. 31. It said it expects to earn between $1.05 and $1.25 per share, up from its previous estimate of 85 cents to $1.05 per share.

Six weeks ago, traders were disappointed by FedEx’s forecast.

“FedEx tells you a lot about overall manufacturing in the country,” said Russ Koesterich a managing director at the money manager BlackRock Inc. “The positive release tells investors the recovery is bumpy but is still on pace.”