Tags: dow | stocks | 2011

Dow Erases 2011 Loss as Stocks Gain

Wednesday, 31 Aug 2011 05:55 PM

Stock prices rose Wednesday, giving the Standard & Poor’s 500 Index its best eight-day gain since 2009, as speculation the economy will keep expanding overshadowed a drop in AT&T Inc. following a government antitrust lawsuit. Treasuries fell, and copper gained.

The Standard & Poor’s 500 Index added 0.5 percent at 4 p.m. in New York, extending its increase since Aug. 19 to 8.5 percent. The Dow Jones Industrial Average climbed to 11,613.53, erasing a year-to-date loss that grew to 7.4 percent three weeks ago. Yields on 10-year notes rose five basis points to 2.23 percent as Treasuries pared the biggest monthly gain since 2008. Copper futures added 1.5 percent. The franc appreciated against all 16 major peers as the Swiss National Bank refrained from curbing its advance.

Stocks gained as the U.S. government reported growth in factory orders that exceeded projections, while a private report showed American business activity topped forecasts. European and Asian shares followed Tuesday’s gain in the S&P 500 after some Federal Reserve officials favored a “more substantial move” to stimulate growth, according to the minutes of the latest policy meeting.

“The economy is not falling off a cliff and at the same time policy makers are aware that growth is slow and they are prepared to do something to accelerate it,” Peter Jankovskis, who helps manage about $2.6 billion at Oakbrook Investments in Lisle, Illinois, said in a telephone interview. “Much of the selling that we’ve experienced was overdone and left the market poised for a rally when sentiment began to change.”

AT&T Lawsuit

The S&P 500 pared its advance after the U.S. government filed a lawsuit to block AT&T’s $39 billion purchase of T-Mobile USA Inc., a deal that would join the nation’s second- and fourth-largest wireless-network operators. AT&T retreated 3.9 percent, the most since Aug. 8. Sprint Nextel Corp., the third-largest carrier, jumped 5.9 percent.

Equities also slipped from their highs of the day after economist Nouriel Roubini said the odds of a recession next year are 60 percent.

“We have reached stall speed in the economy, not just the U.S. but also in the euro zone, the U.K., the most advanced economies,” Nouriel Roubini, chairman of Roubini Global Economics LLC, said in an interview on Bloomberg Television’s “InBusiness with Margaret Brennan” today. “The market is going to fizzle out when the real economy is going to go and tank. We’re entering a recession based on my numbers.”

The MSCI All-Country World Index of shares in 45 nations lost 7.6 percent in August, its worst month since May 2010. The S&P 500 retreated 5.7 percent, the most since the same month, when a 20-minute free-fall erased $862 billion from U.S. equities.

Debt’s Appeal

Concern growth will slow boosted demand in August for the relative safety of government debt, even after S&P cut the U.S. credit rating on Aug. 5. U.S. government debt returned about 3 percent in August, the biggest monthly gain since December 2008, based on Bank of America Merrill Lynch data.

“Most people will be glad to say goodbye to this month,” Russ Koesterich, the San Francisco-based global chief investment strategist for the IShares unit of BlackRock Inc., told Susan Li on Bloomberg Television’s “First Up.” “Investors are well aware that it’s going to be a slow, stubborn recovery. We’re hoping we remain in positive growth mode. The good news is that a lot of the bad news is already reflected in the price.”

Orders placed with U.S. factories rose in July by the most in four months, boosted by demand for motor vehicles and aircraft. The 2.4 percent increase was more than the median forecast of economists in a Bloomberg News survey, Commerce Department figures showed. Vehicle orders climbed last month by the most since January 2003.

Better Than Estimated

The Institute for Supply Management-Chicago Inc.’s business barometer fell to 56.5 this month, reaching the lowest reading since November 2009 but topping the median economist forecast of 53.3. A level of 50 is the dividing line between expansion and contraction.

The Stoxx Europe 600 Index advanced for a third day, paring this month’s decline to 10 percent, the most since October 2008.

European government bonds dropped, with the yield on two- year German notes rising six basis points to 0.71 percent and the yield on French securities increasing eight basis points to 1.06 percent.

The cost of insuring government debt fell to the lowest in two weeks as German Chancellor Angela Merkel’s Cabinet ratified an expansion of the European Financial Stability Facility to help tackle the euro-area debt crisis. The Markit iTraxx SovX Western Europe Index of credit-default swaps linked to 15 governments dropped eight basis points to a midprice of 292.

The Swiss franc appreciated more than 1.7 percent against the euro and dollar, snapping three days of declines, as the central bank refrained from announcing any new steps to curb its gains, after intervening or referring to the currency’s strength on each of the first three Wednesdays this month. The Dollar Index was little changed.

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Stock prices rose Wednesday, giving the Standard Poor s 500 Index its best eight-day gain since 2009, as speculation the economy will keep expanding overshadowed a drop in AT T Inc. following a government antitrust lawsuit. Treasuries fell, and copper gained.The Standard ...
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2011-55-31
Wednesday, 31 Aug 2011 05:55 PM
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