US enjoys positive company reports
US STOCKS rose yesterday as solid corporate profit reports and a drop in the number of Americans on jobless benefits gave investors reasons to buy equities following the S&P 500’s two days of losses.
The market’s rally pushed the benchmark S&P 500 index earlier in the session to its highest intraday level in almost nine months, putting it less than 4 points away from the psychologically important 1,000 level. The Nasdaq briefly rose above 2,000 for the first time since October.
But shares lost ground at the close and finished off the day’s highs.
The stock market’s advance was underpinned by strong demand for the Treasury Department’s auction of a record $28bn of 7-year notes. Strong bids on US debt diminish the chance of a rise in borrowing costs.
The gains were broad-based, but a surge in commodity prices gave an extra boost to raw materials shares. The Reuters/Jefferies CRB index, a gauge of 19 commodities’ prices, rose 3.9 per cent, its biggest daily per centage gain since mid-March. The S&P materials index jumped 3 per cent.
Companies reporting better-than-expected results yesterday included MasterCard, up 3 per cent at $194.11, and industrial conglomerate Tyco International, up 2.9 per cent at $29.64.
Shares of Motorola shot up 9.4 per cent to $7.19 as the world’s No. 3 cellphone maker behind Nokia and Samsung cut costs and shipped more phones than expected, and beat analysts’ expectations.
“We are now in a market where the momentum is so strong that people typically say (it) is overbought,” said Steve Goldman, market strategist at Weeden & Co.
“In actuality, it’s the type of strength that leads to further gains, and pullbacks tend to be shallow.”
The Dow Jones industrial average added 83.74 points, or 0.92 per cent, to close at 9,154.46. The Standard & Poor’s 500 Index rose 11.60 points, or 1.19 per cent, to 986.75. The Nasdaq Composite Index gained 16.54 points, or 0.84 per cent, to 1,984.30.
The S&P 500 is up 45.9 per cent from the 12-year closing low of March 9, but it’s still down 37.4 per cent from its record high close in October 2007.