Wall St rally pushes S&P above 1,000

Published: 2009/08/04

WALL Street rallied Monday to lift the main stock indexes to fresh highs for 2009 as the positive mood was boosted by earnings news and encouraging data on the manufacturing sector.The Standard & Poor’s 500 broad-market index surged above 1,000 for the first time since November 4 and the Nasdaq composite leapt past 2,000 for the first since October 1.

The Dow Jones Industrial Average climbed 114.95 points (1.25 per cent) to close at 9,286.56 while the Nasdaq 30.11 points (1.52 per cent) to 2,008.61.The S&P 500, representing a broad swath of the largest US firms, jumped 15.15 points (1.53 per cent) to 1,002.63.

The market opened higher after strong corporate news from overseas helped reignite a rally that had pushed up the main indexes by more than 12 per cent over three weeks.Gains accelerated after a survey showed improvement in the US factory sector although its activity level remained just shy of growth.

The Institute of Supply Management said its index of the manufacturing sector, also known as the purchasing managers (PMI) index, rose to 48.9 per cent from 44.8 per cent in June.That figure was better than the level of 46.5 per cent expected on Wall Street and closer to the 50 per cent level that separates expansion and contraction.

“The details are consistent with our forecast for both manufacturing and (the overall economy) to rebound this quarter,” said Ryan Sweet at Moody’s Economy.com.Analysts said investors are becoming more comfortable with the idea of an economic recovery and some believe it could be stronger than has been anticipated

The shift in growth expectations that has occurred during the last two weeks has occurred with the subtlety of a sledge hammer,” said Kent Engelke at Capitol Securities Management.After a series of positive economic surprises including one showing the US economy limited its contraction to 1.0 per cent in the second quarter, Engelke said, “I believe positive third-quarter growth is all but inevitable.”

“It feels as though some of the sideline money is starting to jump in and ’chase’ the market higher as many investors have missed the entire 45 per cent move off the March bottom,” said Stuart Freeman, chief equity strategist at Wells Fargo Advisors.“While some consolidation and pullback may be warranted, the momentum to the upside may continue in the near term.”

European indexes also rallied as London’s stock market hit its highest point this year on the back of strong underlying profits at British banks Barclays and HSBC.“Investor optimism and appetite for risk is extremely high at the moment and the recent bout of earnings has helped to cement this sentiment,” said City Index analyst Joshua Raymond in London.

London’s FTSE ended the day up 1.61 per cent at 4,682.46. The Paris CAC 40 rose 1.50 per cent to 3,477.80 and the Frankfurt DAX jumped 1.78 per cent to 5,426.85.Among stocks in focus on Wall Street, Ford Motor Co. raced ahead by 4.13 per cent to US$8.33, as it reported a 2.3 per cent rise in monthly US sales, its first year-over-year monthly sales increase since 2007, helped in part by “cash for clunkers” government incentives.

Apple rose 1.86 per cent to 166.43 dollars after the tech giant announced that Google’s chief executive Eric Schmidt would leave its board due to potential conflicts of interests of the two tech giants. Google rose 2.07 per cent to US$452.21.Loews Corp., a conglomerate in energy exploration, insurance and hotels, rallied 6.86 per cent to US$32.08 after it reported weaker-than-expected profits but attributed the decline mostly to investment losses.

Bonds fell sharply. The yield on the 10-year US Treasury bond climbed to 3.639 per cent from 3.501 per cent Friday while the 30-year bond yield rose to 4.422 per cent from 4.311 per cent. Bond yields and prices move in opposite directions. - AFP