Market Snapshot: U.S. Stocks Surge on Hopes for Global Recovery
U.S. stocks finished higher today posting hefty gains of 2+% as investors’ risk appetite is returning on subdued worries that the European crisis will derail the global economic recovery.
The Dow climbed 2.1% with industrials (up 3.1%) leading the broad advance on the strength of Caterpillar Inc, which advanced 4% for the day on encouraging manufacturing data from Europe. Boeing Co. also gained 4.1% on the plans to expand production of its 737 jets by another 3%.
The S&P 500 surged 2.4% for the day and entered positive territory for the year. All ten sectors advanced today led by the industrials and technology sectors each gaining 2.9% for the day.
The Nasdaq jumped 2.8% for the day and is 1.62% up for the year to-date. In the index, the best performing sector was energy, which gained 4.2% leading the index-wide advance.
U.S. BP shares rose 2.3% today, despite Fitch cutting BP’s credit rating by six levels to two above junk on concern over the company’s ability to meet costs and liabilities associated with the Deepwater Horizon accident. BP’s shares have plummeted 48% since April 20. Tuesday evening, President Obama will address the nation on measures to be taken to repair the economic and ecological damage from the worst oil spill in U.S. history. In terms of the economic impact of the oil spill on U.S. GDP, in RGE’s view, it is considered to be limited.
In Europe, European stocks saw another day of positive market action. The German DAX was up 0.8%; the French CAC 40 gained 1%; the London FTSE 100 was up 0.3%; and the Spanish IBEX 35 was up 1.65%; and in Italy, the FTSE MIB Index rose 1.95%.
On the economic calendar, the New York Fed Empire State manufacturing index edged up marginally in June 2010, indicating an expansion of manufacturing activity for the eleventh consecutive month. With the business activity index at 19.6 in June, the pace of expansion remained little changed from that in May, when the pace of activity cooled off with the business activity index falling 13 points to reach 19.1. (Positive index values indicate growth.) The new orders index improved modestly to 17.5 in June, after falling back 15 points to 14.3 in May, while shipments rose to 19.7 after falling 21 points to 11.3 in May.
The National Association of Home Builders (NAHB) reported that the NAHB/Wells Fargo Housing Market Index (HMI), a measure of builder perceptions regarding current and future home sales, dropped five points to 17 for the month of June. (Index values below 50 indicate there are more builders who believe market conditions are poor than builders who believe conditions are good.) Each of the component indexes saw declines in June, bringing builder confidence back to February levels.
Into close, the S& P 500 index rose 25.60 points, or 2.35% to close a t 1,115.23.
The Dow gained 213.88 points, or 2.10% to close at 10,404.77.
The tech-heavy Nasdaq composite index was up 61.92 points, or 2.76% to close at 2,305.88.
Treasurys prices fell on improved risk appetite with the yield on the benchmark 10-year Treasury note up yielding 3.31%, up from 3.26% late Monday.
Crude for July delivery settled $1.82 up, or 2.4%, at $76.94 a barrel on the New York Mercantile Exchange, supported by the strengthening euro and rallying equity markets.
In currency markets today the dollar slid as investors’ appetite for risk is back.
In currency, EUR/USD traded at 1.2340, up from 1.2243 late on Monday in New York, Cable was quoted at 1.4815, up from 1.4762. USD/JPY traded at 91.45, down from 91.51. USD/CHF was at 1.1326, down from 1.1412, while USD/CAD was quoted at 1.0259, down from 1.0307.
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