Stocks recharge the advance
Stocks rallied Wednesday afternoon, pushing Wall Street to two-week highs, as investors found the positives in the day's bleak report on first-quarter economic growth.
Investors also geared up for an announcement from the Federal Reserve, due out shortly.
The Dow Jones industrial average (INDU) gained 180 points, or 2.3% at around 2:00 p.m. ET, just ahead of the Fed announcement. The S&P 500 (SPX) index added 20 points, or 2.4%. The Nasdaq composite (COMP) rose 42 points, or 2.5%.
Stocks were rising again after two down sessions, recharging the advance that boosted the major gauges all more than 20% over a six-week period. Last week only the Nasdaq gained, with the Dow and S&P 500 posting small losses.
"We had a period of consolidation on the back of a strong move," said Michael Church, president at Addison Capital.
"There have been some reports and earnings that were not as bad as expected and that's helped," he said. "At one point, investors were fearing the apocalypse, but it's become clearer that that's not what is happening."
Wall Street retreated Monday on worries about the potential economic impact of swine flu. On Tuesday, stocks slipped on reports that Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500) may need more capital should the recession deepen.
Fears that major banks may need more cash on hand have been in play this week ahead of the results of Treasury's "stress tests" of the largest companies, due next Monday.
"I think people are just looking forward to the tests being over," said Church.
GDP: The economy shrank at a faster-than-expected pace in the first quarter, surprising economists who were looking for an even slower pace of contraction after a rough fourth quarter of last year.
Gross domestic product fell at a 6.1% annualized rate in the first quarter after falling 6.3% in the fourth quarter. Economists thought it would fall at 4.7% pace, according to Briefing.com forecasts.
GDP was weighed down by a sharp decline in exports and plummeting business inventories. However, the inventory slowdown was seen as a positive, as it could mean the correction cycle is ending. In addition, personal consumption rose, after falling in the previous quarter, raising hopes that consumer spending will pick up.
In other economic news, home loan applications fell last week to the lowest levels in more than a month due to a drop in refinancing demand.
Federal Reserve: The Federal Reserve's two-day policy meeting ends Wednesday, with a decision on interest rates and a statement due at around 2:15 p.m. ET.
The central bank is widely expected to hold rates steady at historic lows near zero. However, the bank's assessment of the economy will be closely scrutinized. In addition, the Fed could announce it is speeding up its Treasury purchasing plan.
Wednesday is also significant as it markets President Obama's 100th day in office.
Banks: Citigroup (C, Fortune 500) has reportedly asked Treasury if it can pay out bonuses to certain workers, according to the Wall Street Journal. Citi has received $45 billion in federal bailout money and may need to raise more. Shares gained 7%.
Bank of America (BAC, Fortune 500) shareholders criticized CEO Ken Lewis for his handling of the company's recent purchase of Merrill Lynch. A vote has been taken at BofA's annual meeting on whether Lewis should retain his chairmanship with results to be announced soon. Lewis will retain his CEO position.
However, shares gained 5% as part of a broad bank stock rally. Wells Fargo (WFC, Fortune 500), Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500), Fifth Third were among the other gainers. The KBW Bank (BKX) sector index rose 4%.
Company news: Aetna (AET, Fortune 500) reported higher quarterly sales and earnings that topped estimates. But the health insurer also said it saw higher-than-expected medical costs. Shares slumped 9%.
Time Warner (TWX, Fortune 500), the parent of CNNMoney.com, reported weaker quarterly profit on slowing ad sales, but results were better than what analysts were expecting.
Dendreon (DNDN) shares rallied 105% in its first day of trading after saying its experimental treatment for advanced prostate cancer extended the lives of men suffering from the disease by four months. Shares were halted after the Tuesday afternoon announcement.
Market breadth was positive. On the New York Stock Exchange, winners beat losers six to one on volume of 700 million shares. On the Nasdaq, advancers topped decliners four to one on volume of 1.4 billion shares.
Bonds: Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.02% from 3.01% Tuesday. Treasury prices and yields move in opposite directions.
Lending rates were mixed. The 3-month Libor rate fell to 1.04% from 1.05% Monday, according to Bloomberg.com. The overnight Libor rate was unchanged at 0.21%. Libor is a bank-to-bank lending rate.
0:00 /00:59100 Days: Rating Obama
Other markets: In global trading, Asian markets ended mostly higher and European markets were higher in afternoon trading.
In currency trading, the dollar fell versus the euro and gained against the yen.
U.S. light crude oil for June delivery rose 97 cents to $50.89 a barrel.
COMEX gold for June delivery rose $6.90 to $900.50 an ounce.
Investors also geared up for an announcement from the Federal Reserve, due out shortly.
The Dow Jones industrial average (INDU) gained 180 points, or 2.3% at around 2:00 p.m. ET, just ahead of the Fed announcement. The S&P 500 (SPX) index added 20 points, or 2.4%. The Nasdaq composite (COMP) rose 42 points, or 2.5%.
Stocks were rising again after two down sessions, recharging the advance that boosted the major gauges all more than 20% over a six-week period. Last week only the Nasdaq gained, with the Dow and S&P 500 posting small losses.
"We had a period of consolidation on the back of a strong move," said Michael Church, president at Addison Capital.
"There have been some reports and earnings that were not as bad as expected and that's helped," he said. "At one point, investors were fearing the apocalypse, but it's become clearer that that's not what is happening."
Wall Street retreated Monday on worries about the potential economic impact of swine flu. On Tuesday, stocks slipped on reports that Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500) may need more capital should the recession deepen.
Fears that major banks may need more cash on hand have been in play this week ahead of the results of Treasury's "stress tests" of the largest companies, due next Monday.
"I think people are just looking forward to the tests being over," said Church.
GDP: The economy shrank at a faster-than-expected pace in the first quarter, surprising economists who were looking for an even slower pace of contraction after a rough fourth quarter of last year.
Gross domestic product fell at a 6.1% annualized rate in the first quarter after falling 6.3% in the fourth quarter. Economists thought it would fall at 4.7% pace, according to Briefing.com forecasts.
GDP was weighed down by a sharp decline in exports and plummeting business inventories. However, the inventory slowdown was seen as a positive, as it could mean the correction cycle is ending. In addition, personal consumption rose, after falling in the previous quarter, raising hopes that consumer spending will pick up.
In other economic news, home loan applications fell last week to the lowest levels in more than a month due to a drop in refinancing demand.
Federal Reserve: The Federal Reserve's two-day policy meeting ends Wednesday, with a decision on interest rates and a statement due at around 2:15 p.m. ET.
The central bank is widely expected to hold rates steady at historic lows near zero. However, the bank's assessment of the economy will be closely scrutinized. In addition, the Fed could announce it is speeding up its Treasury purchasing plan.
Wednesday is also significant as it markets President Obama's 100th day in office.
Banks: Citigroup (C, Fortune 500) has reportedly asked Treasury if it can pay out bonuses to certain workers, according to the Wall Street Journal. Citi has received $45 billion in federal bailout money and may need to raise more. Shares gained 7%.
Bank of America (BAC, Fortune 500) shareholders criticized CEO Ken Lewis for his handling of the company's recent purchase of Merrill Lynch. A vote has been taken at BofA's annual meeting on whether Lewis should retain his chairmanship with results to be announced soon. Lewis will retain his CEO position.
However, shares gained 5% as part of a broad bank stock rally. Wells Fargo (WFC, Fortune 500), Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500), Fifth Third were among the other gainers. The KBW Bank (BKX) sector index rose 4%.
Company news: Aetna (AET, Fortune 500) reported higher quarterly sales and earnings that topped estimates. But the health insurer also said it saw higher-than-expected medical costs. Shares slumped 9%.
Time Warner (TWX, Fortune 500), the parent of CNNMoney.com, reported weaker quarterly profit on slowing ad sales, but results were better than what analysts were expecting.
Dendreon (DNDN) shares rallied 105% in its first day of trading after saying its experimental treatment for advanced prostate cancer extended the lives of men suffering from the disease by four months. Shares were halted after the Tuesday afternoon announcement.
Market breadth was positive. On the New York Stock Exchange, winners beat losers six to one on volume of 700 million shares. On the Nasdaq, advancers topped decliners four to one on volume of 1.4 billion shares.
Bonds: Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.02% from 3.01% Tuesday. Treasury prices and yields move in opposite directions.
Lending rates were mixed. The 3-month Libor rate fell to 1.04% from 1.05% Monday, according to Bloomberg.com. The overnight Libor rate was unchanged at 0.21%. Libor is a bank-to-bank lending rate.
0:00 /00:59100 Days: Rating Obama
Other markets: In global trading, Asian markets ended mostly higher and European markets were higher in afternoon trading.
In currency trading, the dollar fell versus the euro and gained against the yen.
U.S. light crude oil for June delivery rose 97 cents to $50.89 a barrel.
COMEX gold for June delivery rose $6.90 to $900.50 an ounce.
posted by FREDRICK B. A. at
11:10 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home