Wall Street on the rise
The US stock market notched its second straight daily advance today, with investors encouraged by a pull-back in oil prices and some better-than-expected economic data.
Wall Street has been worried about cash-strapped consumers paring back their spending, so it was pleased that the energy markets gave up early gains that briefly drove crude oil above US$125 a barrel.
In other positive signs, the Philadelphia Federal Reserve said regional manufacturing activity is contracting in May at a much slower pace than in April, while major companies including General Electric and CBS Corp were making deals.
“The encouraging news is that the markets have become more functional, and large companies are able to make strategic purchases and sales, which previously was a very difficult thing to do,” said Alan Gayle, senior investment strategist for RidgeWorth Capital Management. Still, he added: “the market is still trying to digest the severity of the slowdown”.
Fears of a credit market meltdown have eased significantly. Federal Reserve Chairman Ben Bernanke said in a speech in Chicago he is “encouraged” by recent efforts by banks to raise cash – a trend that is helping to relieve the credit crisis.
But, Mr Gayle said: “What we’re left with now are cyclical credit strains. And those are likely to linger for a while”.
The Dow Jones industrial average rose 94.28, or 0.73%, to 12,992.66.
Broader stock indicators advanced more than 1% to their highest closing levels since January 3. The Standard & Poor’s 500 index rose 14.91, or 1.06%, to 1,423.57, and the Nasdaq composite index rose 37.03, or 1.48%, to 2,533.73.
The technology-laden Nasdaq got a boost from Intel, which rose 1.13, or 4.7%, to 24.97 after a Lehman Brothers analyst lifted his price target on the chip maker, citing strong product demand.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.82% from 3.92% late yesterday.
The dollar was lower against most other major currencies, and gold prices climbed.
In other economic data, the Fed said nationwide industrial output sank for the second straight month in April by 0.7%, due to big cutbacks in the automotive and other manufacturing industries. The drop was more than double analysts’ average prediction.
The Russell 2000 index of smaller companies rose 7.31, or 0.99%, to 743.38.
Advancing issues led decliners by more than 2 to 1 on the New York Stock Exchange, where volume came to 1.20 billion shares.
