Hopes of Recovery Lift Blue Chips

NEW YORK – Blue-chip stocks rose Monday as the latest economic data on the U.S. manufacturing sector helped offset the gloom over Minnesota Mining & Manufacturing Co.'s earnings warning.

The Dow Jones industrial average rose 91.25 points to close at 10,593.65.

Technology stocks were more mixed, as investors cashed in those holdings to take advantage of last week's strong performance. Analysts said the selling reflected investors' worries about the future.

The technology-laced Nasdaq Composite Index lost 11.82 points to 2,148.72, and the broader Standard & Poor's 500 Index gained 12.31 points at 1,236.73.

``This is a beginning-of-the-quarter kind of push-up,'' said Brian Belski, fundamental market strategist at US Bancorp Piper Jaffray. ``But there's still a huge cloud ahead, especially regarding second-quarter earnings that are going to start coming out over the next few weeks.''

Movement on Wall Street is generally expected to be extremely limited for the rest of the week as investors take advantage of Wednesday's Independence Day  holiday to leave town. Stock exchanges will close at 1 p.m. EDT on Tuesday and remain shut all day Wednesday.

The nation's manufacturing sector contracted for an 11th straight month in June, but a rise in activity heightened hopes the worst is over for the recession-plagues sector, the National Association of Purchasing Management's closely watched manufacturing survey showed.

``This is good news because it means things are getting better, and we don't need more (interest) rate cuts for things to get better,'' said Edgar Peters, chief investment officer at Pan-Agora Asset Management.

The NAPM index rose to 44.7 in June -- beating expectations for a reading of 42.8 -- from 42.1 in May.

Diversified manufacturer 3M capped the Dow's gain, however, after warned of lower earnings because of weakness in the United States, European and Asian Pacific economies and an ongoing impact from the strong U.S. dollar. 3M fell $1.20 to $112.90.

There was a sense that the market action was skewed somewhat in the aftermath of a computer glitch that paralyzed the Nasdaq on Friday, forcing the market to lengthen its trading hours. The extension rippled through exchanges across the nation.

``There's still some turmoil from Friday's close, especially on the Nasdaq,'' Peters said.

In other economic news, the U.S. Commerce Department reported May construction spending rose 0.3 percent to a record $881.6 billion annualized rate, following a revised 0.4 percent gain in the prior month.

Another profit warning came from Priority Healthcare Corp., a health care products distributor, pharmacy and distributor. The company said it will report lower-than-expected earnings because of a delay in introducing key products and a tightening of gross margins. Its stock fell $4.28 to $24.

Parker Hannifin Corp., the world's No. 1 maker of engineered motion and control systems, said late Friday that its earnings would fall sharply below consensus forecasts, citing depressed shipments in North American industrial markets. Its stock fell $1.39 to $41.05.

Some analysts, however, remained optimistic that Wall Street will soon be singing a less gloomy tune with the current corporate confession season -- when many companies warn of disappointing profits -- nearing an end.

``We're going to be on really volatile territory as news on profit warnings continue to be absorbed, but I think a lot of people, myself included, believe that most of the warnings ... should be passing right now,'' said Jeffrey Davis, chief investment officer at State Street Global Advisors.

General Electric Co.'s bid for Honeywell International is still in the spotlight. With the $42 billion merger deal near death, the key question is whether the companies would withdraw it before the European Commission kills it on Tuesday.

The two companies have been ``actively considering'' withdrawal of the transaction late on Monday or early on Tuesday, sources close to the talks said. GE has had no comment on the matter.

In other merger news, UAL Corp.'s United Airlines has pulled out of its controversial $4.3 billion takeover of the US Airways Group Inc., citing its growing unease with the antitrust hurdles facing the deal, a source familiar with the proposal said on Sunday.

Investors got a look at personal income and spending data, searching for clues to how the American consumer is holding up amid the economic slowdown, although there was little market reaction.

The government reported May personal income rose 0.2 percent -- slightly below expectations -- after a similar gain in April. Personal spending, meanwhile, grew a bigger-than-expected 0.5 percent, similar to the gain in the prior month, driven by a rise in demand for durable goods -- items such as refrigerators and autos intended to last for three or more years.

Advancing issues narrowly led decliners on the New York Stock Exchange. Volume came to 1.11 billion shares, compared with 1.73 billion Friday.

The Russell 2000 index fell 14.25 to 498.39.

Overseas, Japan's Nikkei stock average fell nearly 1.7 percent. European issues fared better. Germany's DAX index rose 0.8 percent, Britain's FT-SE 100 gained 1.3 percent, and France's CAC-40 climbed 1.4 percent.

-- The Associated Press and Reuters contributed to this report.