While you were sleeping: BusinessWire overnight wrap

Wednesday 29th October 2008

Stocks on Wall Street rallied, sending the Dow Jones Industrial Average up 11%, as some investors deemed companies relatively cheap after their slump and on expectations the Federal Reserve will cut interest rates further.

The Dow gained 889.35 to 9065.12 and the Standard & Poor's 500 Index rose 11% to 940.49. The Nasdaq Composite advanced 9.5% to 1649.47. Alcoa led gainers on the Dow, rising 17% to US$10.58. Verizon Communications jumped 14% to US$31.39 and AT&T gained 13% to US$27.44. Boeing rose 14% to US$48.30 on the prospects for an end to a strike by machinists.

Stocks pared their gains after a report showed consumer confidence in the world's biggest economy fell to a record low in October. Confidence fell as stocks declined and sources of credit dried up. The Conference Board's confidence index fell to 38, the lowest reading since the monthly series began in 1967.

Crude oil fell after the consumer confidence figures, which stoked concern fuel demand will falter in a shrinking economy. Government figures due October 30 are expected to show US GDP fell 0.5% in the third quarter, according to a Bloomberg survey.

Crude oil for December delivery fell 0.6% to US$62.82 a barrel on the New York Mercantile Exchange.

The Federal Reserve, which began a two-day meeting yesterday, may lower the overnight federal funds rate by 50 basis points to 1%, the lowest since 2004, according to a Reuters survey of major bond firms.

US Treasuries fell on the prospect of a glut of sales to raise funds for government financial rescue efforts. The Treasury plans to auction $24 billion of five-year notes on October 30.

The yield on 10-year Treasuries rose 15 basis points to 3.82%. Two-year yields gained 5 basis points to 1.58%.

Consumer confidence also fell to a record low in France. A gauge of consumer confidence dropped to minus 47 in October from minus 44, according to Insee, the government statistician.

US stocks followed markets in Europe and Asia higher. Germany's DAX 30 soared 11% after Porsche said it plans to take control of Volkswagen, sending the target's shares up 82%. Hypo Real Estate gained 7%.

The UK's FTSE 100 rose 1.9% and France's CAC 40 rose 1.6%. In Tokyo yesterday, the Nikkei 225 Index advanced 6.4%.

In Eastern Europe, where the IMF has agreed to extend funds to the Ukraine and to Hungary, where the government is preparing for a recession in 2009. In the Ukraine, lawmakers delayed debate on legislation that would allow the nation to accept a US$16.5 billion rescue package. Standard & Poor's cut Romania's debt rating to below investment grade.

The yen had a record slide against the euro and dropped against the US dollar as the global rally in stocks slowed repatriations of investment funds to Japan. The yen also fell amid speculation the Bank of Japan is preparing to cut its benchmark interest rate a quarter point to 0.25%.

The yen weakened to 126.57 per euro in New York from 115.92 yesterday. The US dollar strengthened to 97.75 yen from 92.78. The euro rose to $1.265 from $1.2493.

Iceland's central bank lifted its benchmark interest rate by six percentage points to 18% in an effort to drive up its currency after reaching agreement on a rescue package with the International Monetary Fund.

Iceland's economy will contract as much as 10% next year, according to the IMF. The nation also faces soaring inflation and rising unemployment.

Copper prices rose as stocks rallied, easing concern demand for the metal won't fall in a hole. Copper futures for December delivery rose 3% to US$1.8585 a pound on the New York Mercantile Exchange, adding to a 7% surge on Monday.

Gold futures fell as the US dollar strengthened, reducing demand for the precious metal as a haven investment. Gold futures for December delivery fell 0.3% to US$740.50 an ounce on the New York Mercantile Exchange, extending its slide from the record US$1,033 it reached in March.

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