While you were sleeping: US stocks rise, retail sales gain; Treasury auction

Friday 12th June 2009

Stocks on Wall Street rose, helped by a gain in retail sales, fewer jobless claims and signs of demand at an auction of 30-year Treasury bonds.

The Dow Jones Industrial Average climbed 0.4% to 8770.92 and the Standard & Poor’s 500 Index rose 0.6% to 944.89. The Nasdaq Composite advanced 0.5% to 1862.37.

Bank of America surged 8.3% to US$12.97, leading the Dow higher, after analysts at Morgan Stanley raised their profit forecasts for the firm. Aluminium producer Alcoa Inc. rose 6.4% to US$12.22 after figures showed stockpiles of the metal in Japan fell by the most in two years and China took in more imports.

Chevron Corp. gained 2.4% to US$71.90 as crude oil briefly topped US$73 a barrel, helping lift energy shares. Exxon Mobil, the world’s biggest oil company, rose 0.3% to US$74.05.

Shares rose after government figures showed US retail sales rose for the first time in three months in May, as the closure of General Motors and Chrysler dealerships spurred a rush of consumers seeking cheap deals on vehicles.

Retail sales in the US rose 0.5% last month, according to the Commerce Department. Ex-auto sales also rose 0.5%.

The number of workers filing claims for unemployment benefits fell by 24,000 to 601,000 last week, the lowest level since last January.

Still, Federal Reserve figures showed US household wealth continued to shrink in the first quarter, with a drop of US$1.3 trillion reflecting declines in property values and stock holdings.

The net worth of households and non-profit organisations fell to US$50.4 trillion in the first three months of the year, from US$51.7 trillion in the fourth quarter, according to the Federal Reserve’s Flow of Funds report.

The US dollar weakened against most currencies after the upbeat economic data increased investors’ appetite for risk and damped demand for the greenback as a haven.

The euro strengthened 1.2% against the dollar to US$1.4121 and climbed 0.5% to 137.77 yen. The dollar weakened 0.7% to 97.55 yen.

US Treasuries advanced after demand at the auction of US$11 billion of 30-year bonds helped soothe concern the market was choking on new issues.

The yield on 10-year notes fell nine basis points to 3.87% after earlier climbing above 4%, the highest since October. The yield on 30-year Treasuries fell 6 basis points to 4.70%.

Crude oil rose for a third day, topping US$73 a barrel, after the International Energy Agency lifted its outlook for global demand for the first time since August and trading was buoyed by stronger US economic data.

Brent crude was recently at US$71.90 a barrel. China increased net crude purchases to 16.62 million metric tons in May according to government figures.

Gold rose from a two-week low as a weaker dollar helped spur demand for the precious metal as an alternative investment. Gold futures for August delivery rose 0.3% to US$957.60 an ounce on the New York Mercantile Exchange.

The International Monetary Fund revised up its 2010 global economic growth outlook to 2.4%, while paring back its expectations for this year to a contraction of almost 3% from an earlier forecast of a 1.75% contraction.

The World Health Organisation declared an influenza pandemic, raising its alert to phase 6. The WHO warned that people aged between 30 and 50, those with chronic conditions such as asthma and pregnant women were most at risk.

While the virus known as swine flu is stable, there was a risk it could mutate to a more deadly form.

The US and European Union plan to take action against China at the World Trade Organisation this month over export restrictions on around 20 industrial raw materials, Reuters reported, citing EU and industry sources.

Brussels and Washington will formally request consultations with Beijing on the issue on June 22 after failing to persuade China to reduce export tariffs and increase quotas, the report said.

In Europe, the Dow Jones Stoxx 600 gained 1% to 214.80. Allied Irish Banks jumped 13% and Bank of Ireland climbed 8.8%. The U.K.’s FTSE 100 rose 0.6% to 4461.87 and Germany’s DAX 30 rose 1.1% to 5107.26. France’s CAC 40 rose 0.6% to 3334.94.

Businesswire.co.nz

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