MNeagle
4th November 2010, 10:41 AM
By STEVEN RUSSOLILLO
NEW YORK—U.S. stocks soared as the Federal Reserve's latest effort to stimulate the sagging economy was cheered by investors.
The Dow Jones Industrial Average was recently up 181 points, or 1.6%, to 11396, and is trading at its highest level since September 2008 when Lehman Brothers filed for bankruptcy. Caterpillar jumped 3.4%, Boeing rose 2.9% and American Express gained 2.7%, fueling the gains. The blue-chip index earlier rose as much as 212 points, its first 200-point intraday rise since Oct. 5.
The Standard & Poor's 500-share index jumped 1.5% to 1216, led by the materials and energy sectors. The technology-heavy Nasdaq Composite gained 1.3% to 2573.
Investors pushed stocks higher as they digested the Fed's announced plans on Wednesday to purchase an additional $600 billion of longer-term Treasury securities by June in a second round of quantitative easing, dubbed QE2. The central bank also will keep reinvesting principal payments from its securities holdings.
"Investors love the size of the Fed's QE2 announcement," said David Carter, chief investment officer at Lenox Advisors. But he cautioned that the Fed's action suggests the economy is still in dire need of additional help to boost the recovery. "Nobody knows if this QE2 thing is going to work," he added. "But the market is saying it's showtime and let's see what it can do."
On the economic front, initial unemployment claims rose 20,000 to 457,000 in the week ended Oct. 30, the Labor Department said in its weekly report. The four-week moving average, which aims to smooth volatility in the data, rose by 2,000 to 456,000 from the prior week's revised average of 454,000.
U.S. productivity bounced back in the third quarter. Nonfarm business productivity rose at a 1.9% annual rate in the July to September period after falling by 1.8% in the second quarter, according to the Labor Department. The third-quarter figure exceeded economists' expectations of 1.5%.
"We're seeing a tale of two economies," said Stephen Wood, chief market strategist at Russell Investments. "Corporate America continues to do well while housing and the labor market are still struggling. There was nothing particularly new in the jobless claims data. They're not getting a lot worse, but they're also not getting much better."
Demand for U.S. Treasurys rose, pushing the yield on the 10-year note down to 2.48%. Commodities also posted strong gains. Gold futures surged $45.10, or 3.4%, to $1,382.50 an ounce, while crude oil jumped above $86 a barrel.
In contrast, the greenback slumped against its major rivals. The U.S. Dollar Index, which tracks the U.S. currency against a basket of six others, fell 0.9% to 75.79. The euro gained strength against the dollar, trading recently at $1.4224, up from $1.4121 late Wednesday in New York.
With the midterm elections and the Fed statement in the past, much of the uncertainty that's been hovering over the market recently has been eliminated, which is boosting risky assets, Mr. Wood said.
As expected, the Bank of England's Monetary Policy Committee voted against an immediate expansion of its bond purchasing program Thursday and also left its key interest rate unchanged.
Investors analyzed a mixed bag of October same-store sales reports. Retailers last month set the stage for a fiercely competitive Christmas, with price wars, promotions and competitive positioning spurring most of the sales gains.
Macy's, Saks and Nordstrom posted same-store sales figures that exceeded analysts expectations, while Aeropostale, Big Lots and Hot Topic registered disappointing results. Macy's jumped 4.3%, while Big Lots slid 7.8%.
Among other stocks in focus, Potash Corp. of Saskatchewan fell 3.9% after the Canadian government rejected BHP Billiton's $38.6 billion hostile bid for it, but gave the Anglo-Australian miner another 30 days to try to convince the government of its case.
Time Warner Cable's third-quarter earnings rose 34%, beating analysts' estimates, as revenue increased, but the company lost subscribers. Shares rose 4.9%.
DirecTV Group's third-quarter earnings jumped 31% from a year ago as revenue rose and the company added more subscribers than a year earlier. Earnings were in line with analysts expectations, but shares fell 3.2%.
http://online.wsj.com/article/SB10001424052748703805704575593970264417474.html?m od=WSJ_hp_LEFTTopStories
NEW YORK—U.S. stocks soared as the Federal Reserve's latest effort to stimulate the sagging economy was cheered by investors.
The Dow Jones Industrial Average was recently up 181 points, or 1.6%, to 11396, and is trading at its highest level since September 2008 when Lehman Brothers filed for bankruptcy. Caterpillar jumped 3.4%, Boeing rose 2.9% and American Express gained 2.7%, fueling the gains. The blue-chip index earlier rose as much as 212 points, its first 200-point intraday rise since Oct. 5.
The Standard & Poor's 500-share index jumped 1.5% to 1216, led by the materials and energy sectors. The technology-heavy Nasdaq Composite gained 1.3% to 2573.
Investors pushed stocks higher as they digested the Fed's announced plans on Wednesday to purchase an additional $600 billion of longer-term Treasury securities by June in a second round of quantitative easing, dubbed QE2. The central bank also will keep reinvesting principal payments from its securities holdings.
"Investors love the size of the Fed's QE2 announcement," said David Carter, chief investment officer at Lenox Advisors. But he cautioned that the Fed's action suggests the economy is still in dire need of additional help to boost the recovery. "Nobody knows if this QE2 thing is going to work," he added. "But the market is saying it's showtime and let's see what it can do."
On the economic front, initial unemployment claims rose 20,000 to 457,000 in the week ended Oct. 30, the Labor Department said in its weekly report. The four-week moving average, which aims to smooth volatility in the data, rose by 2,000 to 456,000 from the prior week's revised average of 454,000.
U.S. productivity bounced back in the third quarter. Nonfarm business productivity rose at a 1.9% annual rate in the July to September period after falling by 1.8% in the second quarter, according to the Labor Department. The third-quarter figure exceeded economists' expectations of 1.5%.
"We're seeing a tale of two economies," said Stephen Wood, chief market strategist at Russell Investments. "Corporate America continues to do well while housing and the labor market are still struggling. There was nothing particularly new in the jobless claims data. They're not getting a lot worse, but they're also not getting much better."
Demand for U.S. Treasurys rose, pushing the yield on the 10-year note down to 2.48%. Commodities also posted strong gains. Gold futures surged $45.10, or 3.4%, to $1,382.50 an ounce, while crude oil jumped above $86 a barrel.
In contrast, the greenback slumped against its major rivals. The U.S. Dollar Index, which tracks the U.S. currency against a basket of six others, fell 0.9% to 75.79. The euro gained strength against the dollar, trading recently at $1.4224, up from $1.4121 late Wednesday in New York.
With the midterm elections and the Fed statement in the past, much of the uncertainty that's been hovering over the market recently has been eliminated, which is boosting risky assets, Mr. Wood said.
As expected, the Bank of England's Monetary Policy Committee voted against an immediate expansion of its bond purchasing program Thursday and also left its key interest rate unchanged.
Investors analyzed a mixed bag of October same-store sales reports. Retailers last month set the stage for a fiercely competitive Christmas, with price wars, promotions and competitive positioning spurring most of the sales gains.
Macy's, Saks and Nordstrom posted same-store sales figures that exceeded analysts expectations, while Aeropostale, Big Lots and Hot Topic registered disappointing results. Macy's jumped 4.3%, while Big Lots slid 7.8%.
Among other stocks in focus, Potash Corp. of Saskatchewan fell 3.9% after the Canadian government rejected BHP Billiton's $38.6 billion hostile bid for it, but gave the Anglo-Australian miner another 30 days to try to convince the government of its case.
Time Warner Cable's third-quarter earnings rose 34%, beating analysts' estimates, as revenue increased, but the company lost subscribers. Shares rose 4.9%.
DirecTV Group's third-quarter earnings jumped 31% from a year ago as revenue rose and the company added more subscribers than a year earlier. Earnings were in line with analysts expectations, but shares fell 3.2%.
http://online.wsj.com/article/SB10001424052748703805704575593970264417474.html?m od=WSJ_hp_LEFTTopStories