While you were sleeping: Wall St rallies on upbeat consumers; oil, copper gain

Wednesday 27th May 2009

Stocks on Wall Street, crude oil and copper rallied after U.S. consumer confidence jumped by the most in six years, stoking optimism the world’s biggest economy will lift out of its slump.

The Conference Board’s consumer sentiment index jumped to 54.9 this month from a revised 40.8 in April, rounding out the biggest two-month gain since records began in 1967. The reading outpaced the estimate in a Bloomberg survey of 42.6. Consumers make up about 70% of the U.S. economy.

The Standard & Poor’s 500 Index rose 2.6% to 910.33 and the Dow Jones Industrial Average advanced 2.4% to 8473.49. The Nasdaq Composite gained 3.5% to 1750.43.

Home improvement chain Home Depot Inc. climbed 4.1% to USD$23.80, leading a 3.4% gain in the S&P Consumer Discretionary Sector. Internet & catalogue retailers as a group gained 3.5%. Retailer Macy’s Inc. gained 5.9% to US$11.85.

Apple Inc. jumped 6.8% to US$130.78 after the stock was upgraded by Morgan Stanley on the outlook for earnings from its iPhone.

JPMorgan Chase rose 6.2% to US$36.54, leading the Dow higher on reports it stands to benefit from an accounting rule that will allow it to convert bad loans acquired from Washington Mutual into income. The rule allows for the difference between the value of the loans and the cash flow they will produce to be recognised.

Exxon Mobil rose 1.4% to US$69.81 and Freeport-McMoRan Copper & Gold climbed 3.4% to US$49.99 after prices of oil and copper gained.

General Motors gained 0.7% to US$1.44 after the automaker, which is heading for bankruptcy, reduced the amount of stock it will give to a labour union health-care trust to 17.5%, while cutting future obligations. It had previously proposed giving 39% of the stock to the UAW.

Still, GM failed to win support from bondholders for a debt-for-equity swap, which had required 90% support, Reuters reported.

Auto and home lender GMAC LLC has improved its financial position after receiving US$13.5 billion in federal aid, raising the prospect of a positive review of its debt rating in the next two years, Standard & Poor’s said. The ratings company reaffirmed GMAC’s CCC rating.

The U.S. dollar gained against the yen and the euro after the consumer confidence report and as concern waned that America’s AAA credit rating was under threat. Renewed fears about Germany’s economy weighed on the regional currency. Currency markets were also rattled by reports North Korea had test-fired more missiles.

The euro fell to $1.3981 from $1.4017 yesterday and traded at 132.78 yen from 132.92. The dollar traded at 94.97 yen from 94.83.

Crude oil advanced to a six-month high after the consumer confidence report stoked optimism demand for fuel may revive. Crude for July delivery rose 1.2% to US$62.43 a barrel on the New York Mercantile Exchange.

Group of Eight nations at a meeting in Rome warned that the economic and financial turmoil can’t be allowed to delay investment in energy projects needed to ensure sustainable prosperity.

U.S. gold futures for June delivery fell US$5.60 at $953.30 an ounce in New York.

Copper futures for July delivery rose 2.1% to US$2.141 a pound on the New York Mercantile Exchange.

Stocks in Europe also received a lift from the revival in U.S. consumer confidence.

The Dow Jones Stoxx 600 rose 0.8% to 208.96.

Retailers on the regional index rose 1.8% as a group. Tesco Plc, the U.K.’s biggest retailer, jumped 3.5% while Royal Ahold NV, which owns supermarkets in the U.S., gained 2.2%.

The U.K.’s FTSE 100 rose 1.1% to 4411.72 and Germany’s DAX 30 climbed 1.4% to 4985.60. France’s CAC 40 rose 1.1% to 3270.09.

Danone SA fell 5.1% on its plan to raise 3 billion euros in a rights offer.

Businesswire.co.nz

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