While you were sleeping: US, European stocks rally, dollar falls

Thursday 16th July 2009

Stocks on Wall Street rallied after Intel Corp. forecast better-than-expected sales, Federal Reserve minutes showed policymakers see the recession slowing and manufacturing data picked up.

Intel climbed 7.3% to US$18.05 after reporting increased orders for computer chips and forecasting third-quarter revenue will reach as much as $8.9 billion. American Express gained 11% to US$27.22, leading the Dow Jones Industrial Average up 3.1% to 8616.21.

The Standard & Poor’s 500 rose about 3% to 932.68.

The Nasdaq Composite jumped 3.5% to 1862.90 as Intel’s forecast drove a rally in tech stocks. Cisco Systems rose 5.8% to US$19.81, Hewlett-Packard gained 4.5% to US$38.82 and Microsoft Corp. rose 4.4% to US$24.12.

Exxon Mobil climbed 3.4% to US$68.44 as the price of crude oil jumped.

CIT Group shares were halted pending an announcement after the commercial lender sought a federal bailout. Reuters reported that US aid may include a temporary loan though support isn’t guaranteed.

US Treasuries tumbled on signs the recession is abating. The yield on 10-year notes jumped 14 basis points to 3.62% and the yield on 30-year Treasuries rose 13 basis points to 4.5%.

Industrial production in the world’s largest economy fell 0.4% in June, the slowest pace in eight months, according to Federal Reserve figures. Capacity utilization fell to 68% last month, the lowest level since records began in 1967.

US factory output slipped 0.6%, with automobile and parts output sliding 2.6%, an improvement on the previous month’s 8.2%. The New York Fed’s Empire Index improved to -0.6 this month in July from -9.4 last month.

Consumer prices rose 0.7% in June, according to the Commerce Department, reflecting higher energy costs.

Notes of the FOMC’s meeting last month showed Fed officials saw the potential for further shocks in the US economy though not to the extent that warranted any expansion in asset purchases.

The US dollar and the yen weakened against the euro as rallying stocks stoked investors’ appetite for riskier, or higher yielding assets.The dollar fell to $1.4105 per euro from $1.3967.

The yen dropped to 132.94 per euro from 130.62. The yen weakened to 94.22 per dollar from 93.50. The Dollar Index, which tracks the greenback against the euro, yen, pound, Canadian dollar, krona and Swiss franc, fell 0.8% to 79.41.

Copper rose by the most in five weeks on optimism a return to stability in US manufacturing will swell demand for the metal used to make pipes and wires.

Copper futures for September delivery rose 4% to US$2.392 a pound on the New York Mercantile Exchange and has soared 70% this year. Prices for zinc, nickel and aluminium also gained.

Gold futures for August delivery rose 1.8% to US$939.40 an ounce in New York.Crude oil jumped by the most in six weeks after Energy Department figures showed a bigger-than-expected decline in US stockpiles of crude.

Inventories fell by 2.81 million barrels to 344.5 million last week, according to the Energy Department.

Crude oil for August delivery rose 3.4% to US$61.54 a barrel on the New York Mercantile Exchange.

Shares in Europe climbed after Intel’s forecast and better projections from ASML Holding NV. The Dow Jones Stoxx 600 index climbed 2.7% to 209.08, the biggest advance since June 1.

STMicroelectronics, Europe’s largest chipmaker, rose 7.3% and Infineon Technologies, the second-largest, jumped 8.1%, helped by Intel’s outlook. Rio Tinto Group climbed 4.2% as prices of metals rallied.

The UK’s FTSE 100 rose 2.8% to 4346.46 and Germany’s DAX 30 gained 3.1% to 4928.44.

France’s CAC 40 rose 2.9% to 3171.27, led by an 11% surge in Alcatel-Lucent SA.Netherlands-based ASML rose 4.7% after forecasting revenue this quarter will jump to 450 million euros.

Businesswire.co.nz

Comments from our readers

No comments yet