Second day of bounce back on Wall Street
US stocks scored a second day of solid gains yesterday, led by materials and energy stocks, as investors set aside weak figures on the domestic labour market.
Rumours about strong growth figures due overnight from China helped wash away some of the worries that hit stocks during a five-day streak of losses that ended with Wednesday’s rebound.
Basic materials shares led gains as commodity prices advanced. The S&P materials sector index jumped 2.8 per cent. US Steel gained 7.5 per cent to $29.36. Freeport-McMoRan Copper & Gold rose 5.9 per cent to $37.89 and an index of gold and silver miners’ shares rose 3.7 per cent.
Overall the Dow Jones industrial average jumped 181.19 points, or 1.41 per cent, to 12,986.58 at the close. The Standard & Poor’s 500 Index gained 18.86 points, or 1.38 per cent, to 1,387.57. The Nasdaq Composite Index climbed 39.09 points, or 1.30 per cent, to 3,055.55.
The rebound pushed the S&P 500 back above its 50-day moving average, a sign that traders may see the recent pullback of more than four per cent as an opportunity to catch up with the benchmark’s gains. The index is up more than 10 per cent in 2012.
Concerns about the Eurozone’s debt crisis were eased by lower Italian bond yields.
Benchmark bond yields in Italy and Spain dropped following solid demand at this week’s Italian debt auctions, while the euro hit a one-week high against the US dollar, indicating a reduction in near-term concern about the Eurozone’s debt troubles.
In a sign that the US labour market’s recovery may be stalling, government data showed new US claims for unemployment benefits rose unexpectedly last week to their highest level since late January. But some economists cited the Easter holidays for the spike in claims, adding that they expected applications will keep declining in the weeks ahead.
Google shares rose one per cent to $657.67 in extended trading after the company reported its quarterly results and announced a proposal to effectively implement a 2-for-1 stock split.
After the bell, shares of Dow Chemical rose 1.8 per cent to $33.25 after the company boosted its quarterly dividend by 28 per cent and forecast earnings growth for the foreseeable future.
Early into earnings season, results are beating Wall Street’s expectations at a fast clip. Analysts say the expectations could have been lowered too much and stocks can seem cheap after the S&P’s recent pullback of over four per cent.
“Earnings so far have been better than expected, and that reinforces the view that forecasts had gotten too pessimistic,” said David Joy, chief market strategist at Ameriprise Financial.