Dow Jones:11,433.18 (+330.06) Nasdaq:2,566.05 (+86.70) S&P 500:1,194.89 (+39.43)
US STOCKS jumped 3 per cent yesterday, extending gains into a second week as a pledge by German and French leaders boosted hopes that the euro zone debt crisis may be resolved.
The gains lifted the S&P 500 above its 50-day moving average for the first time since late July, a bullish technical signal. The S&P 500 is now up about 11 per cent since its low on Tuesday, when it briefly fell into bear-market territory.
Financials, the most beaten-down stocks during the recent slide, led the rally. The KBW bank index jumped 5.3 per cent, with JPMorgan Chase up 5.2 per cent at $32.30 and Bank of America up 6.4 per cent at $6.28.
The gains, however, came on the second-lightest day of trading since July and may not be indicative of a long-term trend. The advance has been driven by short-covering and managers buying stocks as they try to catch up to the sharp rally built on headlines out of Europe.
The euro, with which the S&P 500 has had a strong correlation, rose the most in 15 months against the dollar.
Earnings season is set to begin with Alcoa’s report after today’s closing bell and will likely become a driver for stocks in coming weeks. Shares of aluminium company Alcoa, which is one of the 30 Dow industrials, jumped 3.9 per cent to $10.09.
Adding to optimism that there may be a resolution of the euro zone’s problems, a move to nationalise Franco-Belgian bank Dexia was seen as an indication that governments would step in and keep large lenders from failing.
The energy and materials sectors also ranked among the day’s strongest-performing sectors, while the Dow Jones Transportation Average gained 3.9 per cent.
Tech provided another source of strength, with the Philadelphia semiconductor index up 2.8 per cent.
The materials and energy sectors are forecast to have had the highest earnings growth rates for the third quarter, Thomson Reuters data showed. Volume was lighter than average, possibly affected by the US Columbus Day holiday. Government offices and the Treasury bond market were closed for the holiday.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of nearly 11 to 1. – (Reuters)
