While you were sleeping: Stocks rally, oil climbs, greenback sinks

Tuesday 20th October 2009

Stocks on Wall Street rallied after companies including newspaper publisher Gannett Co. posted earnings that beat estimates and speculation grew that recovery is taking hold in the world’s biggest economy.

The Dow Jones Industrial Average gained 1% to 10.092.19 and the Standard & Poor’s 500 rose 0.9% to 1097.90. The Nasdaq Composite rose 0.9% to 2176.32.

Gannett, the biggest newspaper publisher in America, jumped 8.5% to US$14.10 after posting adjusted third-quarter earnings of 44 cents, versus estimates of 41 cents.

Motorola Inc. gained 8.2% to US$8.49 ahead of the launch of its next Android phone. Caterpillar Inc., the biggest US manufacturer of heavy earth-moving equipment, rose 6.2% to US$57.95 after RBC Capital Markets recommended buying the shares.

According to Bloomberg, 34 of 41 companies in the S&P 500 that have reported since October 7 beat estimates, including JPMorgan Chase & Co. and Intel Corp.

US homebuilders’ confidence fell this month on speculation the government will end its US$8,000 tax credit for first-home buyers.

The National Association of Home Builders/Wells Fargo confidence index fell to 18 from 19 last month. A reading below 50 means most respondents see conditions as poor.

The US dollar weakened against the euro after the Federal Reserve indicated it will keep borrowing costs near zero as it considers ways to drain cash from the financial system.

The dollar fell to $1.4941 per euro from $1.4905 on Friday in New York. The yen strengthened to 90.63 per dollar from 90.89. Japan’s currency was little changed at 135.44.

The New York Fed said it is assessing the use of reverse repurchase agreements to take cash out of the financial system while increasing the counterparties for reverse repo operations to more than just the 18 primary dealers that trade with the Fed.

The International Monetary Fund said it is too early to scale back stimulus measures put in place to prop up financial markets.“This is no time to take risks with premature withdrawal of the stimulus, John Lipsky, the IMF’s No. 2 official, said in Mexico.

Crude oil rose to its highest level in 12 months, climbing above US$79 a barrel as stocks rose and optimism swelled for global economic growth and fuel demand. The weakening dollar also swelled prices of commodities.

Crude oil for November delivery rose 1.3% to US$79.54 a barrel on the New York Mercantile Exchange and earlier reached US$79.69 a barrel, the highest level since October last year.

Copper rose to a five-week high as the dollar weakened amid strikes by miners in Chile and Peru. Copper futures for December delivery rose 4.3% to US$2.9665 a pound on the New York Mercantile Exchange.

Gold climbed as the greenback weakened, stoking demand for the precious metal as an alternative investment. Gold futures for December delivery edged up 0.6% to UAS$1,058.10 in New York.

US federal investigators plan to charge at least 10 more people with insider trading, including some linked to the arrested billionaire hedge-fund manager Raj Rajaratnam, Bloomberg reported, citing people familiar with the situation.

European stocks rose to a 12-month high after National Express Group received a preliminary 1.7 billion-pound merger proposal from Stagecoach Group.

The Dow Jones Stoxx 600 climbed 1.5% to 249.34.National Express soared 11%. Royal Dutch Shell Plc climbed 2.4% after the price of crude oil gained. Daimler AG jumped 7% to a four-month high after saying profit beat estimates.

Among national benchmarks, the UK’s FTSE 100 rose 1.8% to 5281.54, Germany’s DAX gained 1.9% to 5852.56 and France’s CAC 40 advanced 1.7% to 3892.36.

Businesswire.co.nz

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