While you were sleeping: Stocks rise on earnings, data; greenback sinks

Friday 9th October 2009

Stocks rose on Wall Street after Alcoa Inc. unexpectedly posted a profit, boosting optimism about the third-quarter earnings season, while retail sales climbed and jobless claims hit a nine-month low.

The US dollar sank to a new 14-month low.

The Dow Jones Industrial Average gained 0.8% to 9804.78 and the Standard & Poor’s 500 gained 0.9% to 1067.27. The Nasdaq Composite rose 1% to 2131.94.

Alcoa, the largest US aluminium producer, gained 2.5% to US$14.55 after posting earnings before one-time items of 4 cents a share, versus forecasts of a loss of 9 cents.

Lennar Corp. led gains in homebuilders, jumping 9.9% to US$14.49, the biggest gain on the S&P 500, after House Speaker Nancy Pelosi said Congress will consider extending a home buyer’s tax credit and Treasury Secretary Timothy Geithner said there are “broad signs” the housing market is improving.

DR Horton climbed 8.6% to US$11.61 and KB Home rose 7.1% to US$16.27.

Abercrombie & Fitch, the clothing chain, rose 5.5% to US$34.46 after data showed retailers’ same-store sales rose 0.6% last month, surprising economists who had forecast a 1.1% decline.

PepsiCo Inc. fell 1.8% to US$60.08 after the soft-drink company reported third-quarter revenue that missed estimates.

Stocks extended their gains after the Labor Department said first-time jobless claims fell to 521,000 last week, the lowest since January and less than expected.

Stocks pared their gains after the Treasury’s sale of US$12 billion of 30-year bonds garnered less demand that was expected.

The US dollar fell, touching a two-week low against the euro as optimism about global economic growth spurred demand for higher yielding, or riskier assets.

The euro strengthened after the European Central Bank kept its refinancing rate at a record low, figures showed German industrial output grew 1.7% in August and Alcoa’s profit lifted equity markets. The pound strengthened after the Bank of England kept its key rate unchanged and said it will continue to review its asset-purchase programme.

The dollar slipped to US$1.4787 per euro from US$1.4691. The euro strengthened to 130.73 yen from 130.18 yen. The dollar traded at 88.42 yen from 88.61.

The Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.6% to 75.92.

Asian central banks bought US dollars to strengthen their own currencies and limit the damage to exports, according to a Reuters report. Central banks in South Korea, Hong Kong, Taiwan, Thailand and the Philippines bought dollars, according to the report. Russia may have bought US$4 billion of dollars this week.

The weakening dollar helped stoke demand for gold as an alternative investment and spurred demand for metals.

Gold futures for December delivery gained 1.6% to US$1,061.20 an ounce on the New York Mercantile Exchange and earlier touched a record US$1,062.70.

Copper had the biggest gain in six weeks as the dollar weakened and after more upbeat US economic data.

Copper futures for December delivery rose 3.7% to US$2.8835 a pound on the New York Mercantile Exchange.

Crude oil climbed after the US Energy Department reported crude stockpiles dropped by 978,000 barrels last week and as the greenback weakened. Crude for November delivery gained 1.3% to US$70.48 a barrel.

Stocks rose in Europe, with the Dow Jones Stoxx 600 climbing 1.3% to 243.44. Among regional benchmarks, the UK’s FTSE 100 rose 0.9% to 5154.64, Germany’s DAX 30 gained 1.3% to 5716.54 and France’s CAC 40 rose 1.3% to 3806.81.

Businesswire.co.nz

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