While you were sleeping: Dow tops 10,000, extending global rally

Thursday 15th October 2009

Stocks rose on Wall Street, extending a global rally, after JPMorgan Chase posted earnings that beat estimates, stoking optimism for economic growth and weakening the US dollar.

The Dow Jones Industrial Average gained 1.4% to 10,007.40, topping 10,000 for the first time in a year. The Standard & Poor's 500 rose 1.7% to 1090.85 and the Nasdaq Composite advanced 1.3% to 2168.44.

JPMorgan's third-quarter earnings climbed to US$3.59 billion, or 82 cents a share, from US$527 million, or 9 cents a year earlier. Revenue from fixed-income trading rose to a record $5 billion. The second-largest US lender posted a loss from its credit card business and said credit costs are likely to remain high.

Shares of JPMorgan climbed 3.1% to US$47.07, pacing gains in lenders on optimism its results bode well for the sector. Bank of America, which reports earnings tomorrow, rose 3.9% to US$18.50, leading the Dow higher.

BoA is forecast to post a US$212 million loss, according to a Bloomberg survey, on costs to integrate its purchase of Merrill Lynch.

Goldman Sachs may report profit almost tripled to US$2.4 billion tomorrow. Its shares rose 5.9% to US$193.14.

Intel Corp., the world's biggest maker of computer chips, rose 1.7% to US$20.83. It posted results that beat expectations and forecast stronger-than-expected fourth-quarter earnings after the market close the previous day.

Dell Inc. gained 1.6% to US$15.55 after chief executive Michael Dell gave an upbeat appraisal of demand next year as improving company performance spurs them to upgrade their PCs. Home Depot, the biggest US home improvement chain, fell 0.4% to US$27.42 after the Commerce Department reported retail sales fell 1.5% last month.

The decline was milder than expected. Excluding autos, sales rose 0.5%.

Shares rallied in Europe, with the Dow Jones Stoxx 600 gaining 2.1% to 246.98. Among regional benchmarks, the FTSE 100 gained 2% to 5256.10, Germany's DAX 30 rose 2.5% to 5854.14 and France's CAC 40 climbed 2.1% to 3882.67.Lenders rallied after JPMorgan's results. HSBC Holdings rose 2.7%, Barclays Plc jumped 6.6% and UBS AG gained about 4%.

Miners and oil companies advanced as prices of commodities rose and after Rio Tinto raised its forecast for iron ore production.

Rio climbed 5.3%, BHP Billiton rose 4.3% and Xstrata surged 7.7%. Germany's BASF gained 7.4%, leading chemical makers higher, after posting better-than-expected third-quarter results.

The Reuters/Jefferies CRB Index of 19 commodities rose 0.4% to 269.10. Gold futures for December delivery rose 0.7% to US$1,065 an ounce on the New York Mercantile Exchange as the weakening US dollar spurred demand for the precious metal as an alternative investment.

Crude oil rose to a seven-week high on speculation demand for fuel will revive with global economic growth and as the greenback fell.

The Organisation of Petroleum Exporting Countries raised its estimate for consumption in 2010 on increasing demand from emerging markets.

Crude oil for November delivery climbed 1.2% to US$74.15 a barrel on the New York Mercantile Exchange. Copper rose after China, the biggest consumer of the metal used to make pipes and wires, increased purchases.

China's September imports jumped 23% to 399,052 in September.Copper futures for December delivery rose 1.2% to US$2.8285 a pound in New York.

The US dollar fell to a new 14-month low against the euro as JPMorgan's results stoked optimism for global growth and demand for higher yielding, or riskier assets in other currencies.

With the Federal Reserve's target interest rate near zero, the greenback is jockeying with the yen to become the currency of choice to fund the carry trade.The dollar fell to $1.4905 from $1.4854 and touched $1.4942, the least since August last year.

The yen gained to 89.40 per dollar from from 89.71. Japan's currency was little changed at 133.33 per euro, from 133.26.

The Dollar Index, which tracks the greenback against the basket of six major currencies, fell 0.6% to 75.56 and earlier touched 75.436, the lowest since August 2008.

Minutes of the Federal Open Market Committee's meeting of September 22-23 showed some policy makers were prepared to increase the central bank's $1.25 trillion mortgage-backed securities purchase program to underpin the economy's recovery.

"Members discussed the importance of maintaining flexibility to expand the asset purchase programs should the economic outlook deteriorate or to scale back the programs should economic and financial conditions improve more than anticipated," according to the minutes said.

Businesswire.co.nz

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