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Earnings-driven rally pushes Dow index above 10,000
2009-10-14
NEW YORK (AFP) - A powerful rally lifted the Dow Jones Industrial Average to its first close above 10,000 in over a year Wednesday, amid growing optimism about a recovery in profits and the overall economy. The blue-chip index, Wall Street's leading barometer, rallied 144.80 points (1.47 percent) to close at 10,015.86, its highest closing level since October 3, 2008. The Nasdaq composite jumped 32.34 points (1.51 percent) to 2,172.23 and the broad-market Standard & Poor's 500 index climbed 18.83 points (1.75 percent) to 1,092.02, the highest levels for those indexes in over a year. Cries of joy rang out at the New York Stock Exchange as the Dow hit 10,001.58 at 1720 GMT after hovering around the key 10,000 level for several minutes. It was the first time the index had been above 10,000 points since October 7, 2008, when the stock market was sinking rapidly following the collapse of the Lehman Brothers three weeks earlier. Dow Jones milestones The rally was sparked by stronger-than-expected earnings from computer chip giant Intel and banking firm JPMorgan Chase, among others. "Stocks bolted higher today in the wake of well-received earnings from a pair of corporate titans," said Elizabeth Harrow at Schaeffer's Investment Research. Jon Ogg at 24/7 Wall Street said the report from JPMorgan represented "very impressive earnings" from "the cleanest bank in America." "The results are strong enough that it has set a very high bar for its peers," he said. The market took in stride a report showing a drop in US retail sales, due in large part to the end of government trade-in incentives. The figure was better than most analysts had expected. Retail sales fell 1.5 percent following a revised 2.2 percent jump in August. The figure was not as weak as a 2.1 percent drop expected by most analysts. Auto sales fell dramatically by 10.4 percent, reflecting the end in August of the "cash-for-clunkers" program. But retail sales excluding autos were surprisingly strong, up 0.5 percent in September and comfortably higher than expectations of a 0.2 percent rise in core sales, the Commerce Department said. "What is important to look at in today's report are 'core' retail sales," said Brian Wesbury at First Trust Portfolios. "This shows that consumers have been spending, despite what the conventional wisdom has been saying." Michelle Meyer at Barclays Capital said the report is consistent with 3.5 percent economic growth in the third quarter. "In addition, it sets the stage for another modest gain in consumer spending in the fourth quarter and, perhaps, a decent holiday shopping season," she said. European stock markets also rallied on investor confidence in the prospects for recovery. In London, the FTSE 100 index of leading shares added 1.98 percent to 5,256.10. In Paris, the CAC 40 climbed 2.14 percent to 3,882.67 and in Frankfurt the DAX jumped 2.45 percent to 5,854.14. The churning on financial markets also sent crude oil futures to a one-year high above 75 dollars, and sent the US dollar lower. Gold however fell from record levels. New York gold prices reached as high as 1,072 dollars per ounce before closing at 1,064.70 dollars. Among US stocks in focus, JPMorgan Chase jumped 3.29 percent to 47.16 dollars, helping the financial sector. Goldman Sachs rallied 2.7 percent to 192.28 dollars and Citigroup lept 3.52 percent to 5.00 dollars. Both were set to report results Thursday. Among others reporting earnings, Intel advanced 1.66 percent to 20.83 dollars and Abbott Laboratories jumped 3.1 percent to 51.20 dollars. The bond market declined. The yield on the 10-year US Treasury bond rose to 3.423 percent from 3.312 percent on Tuesday and that on the 30-year bond increased to 4.275 percent from 4.153 percent. Bond yields and prices move in opposite directions.
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