por admin » Jue Nov 04, 2010 3:20 pm
Dow Closes at Highest Level Since Lehman Collapse
By STEVEN RUSSOLILLO
NEW YORK—Stocks rallied to their highest level since the Sept. 2008 bankruptcy of Lehman Brothers Holdings Inc. as investors applauded the Federal Reserve's latest effort to stimulate the struggling economy.
From stocks to bonds to gold to cotton, assets are spiking higher on the heels of the Fed's $600 billion Treasury-buying binge. But the program has one big blind spot: the jobs market. Deborah Blumberg, Kathleen Madigan and Paul Vigna report.
.The Dow industrials closed up 219.64 points, or 1.96%, at 11434.77. The S&P 500 closed at 1221.04, up 1.9%, while the Nasdaq Composite closed at 2577.34, up 1.5%. Bank of America, Caterpillar and American Express fueled the gains as each rose more than 3.4%. Pfizer was the only blue chip trading in negative territory.
The Standard & Poor's 500-stock index jumped 1.6% to 1217, led by the materials and energy sectors. The technology-heavy Nasdaq Composite gained 1.3% to 2574.
Investors pushed stocks higher as they digested the Fed's plans, announced 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.
"I'm a little surprised that there wasn't a 'sell the news' reaction, but people are clearly relieved at the size of the quantitative easing package," said Ben Halliburton, chief investment officer at Tradition Capital Management. "Although [quantitative easing] is good for asset prices, the reality is it will likely have little impact on the employment picture. Basically we've had a recovery in stocks and corporate profits, but it still hasn't trickled into jobs or small businesses."
On the employment front, initial jobless claims jumped back above the 450,000 level, suggesting continued weakness in the labor market. But U.S. productivity bounced back in the third quarter, rising at a 1.9% annual rate, exceeding economists' expectations.
Associated Press
.Investors are gearing up for the October nonfarm payrolls report, due Friday. But market participants don't expect the monthly jobs report to have a major effect on the market.
"Unless it's something bizarre i just don't see the jobs report having a major impact one way or the other," said Barry James, president and portfolio manager at the James Advantage funds.
In the aftermath of the Fed's announcement, investors rushed into a plethora of asset classes while the dollar continued sinking. Demand for U.S. Treasurys rose, pushing the yields for the two-year and five-year notes down to record lows. The yield on the benchmark 10-year note dropped to 2.49%.
Commodities also posted strong gains as the dollar weakened, continuing a trend seen over the last few months. Gold prices set a fresh record Thursday as investors flocked to the safety of the precious metal amid escalating inflation and currency worries. Meanwhile, crude oil touched a fresh six-month high and settled above $86 a barrel.
"The Fed has signaled this move for some time now and no one wants to get on the wrong side of the Fed," said Rex Macey, chief investment officer at Wilmington Trust.
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.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%. The euro gained strength against the dollar, trading recently at $1.4200, up from $1.4121 late Wednesday in New York.
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Macy's, Saks and Nordstrom posted same-store sales figures that exceeded analysts expectations. But Aeropostale, Big Lots, Hot Topic registered disappointing results. Macy's jumped 6.8%, while Big Lots slumped 7.2%.
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