After a long weekend, investors returned to trading desks with renewed enthusiasm as corporate earnings reports and activity on the mergers and acquisitions front gave bruised sentiments a much-needed respite. Although concerns over Beijing’s plans to curtail bank lending remained intact, investors chose to set aside those worries as leaders in Europe pledged support to Greece and economic data pointed towards a slow economic recovery taking shape.
A weak dollar also helped markets by sending commodities stocks higher. The US dollar reversed last week’s gains, and fell 0.8% against a basket of currencies. Gold prices rose to $1,120 an ounce and crude jumped 3.9%, the most in four months, to $77 a barrel.
As fears of sovereign debt contagion dissipated, the blue-chip Dow Jones industrial average jumped 170 points, or 1.7%, with all but two of its components ending the day in the green. The tech-laden Nasdaq advanced 1.4% to 2,214 and the broader S&P500 index led with a 1.8% surge. This was the DJIA’s and S&P500’s sharpest point and percentage advance since November 9, and NASDAQ’s since January 19. Advancing issues widely outpaced decliners, with volume on the NYSE a modest 1.067 billion shares.
All but one of the ten S&P500 industry sectors recorded gains of at least 1%; health care sector was the only relatively weak performer. Pfizer (NYSE:PFE) slipped 0.5% even as Merck (NYSE:MRK) reported estimate-topping results. Shares in Merck rose 2%. Basic material shares were at the top of the list of gainers, up 2.9%, as the greenback weakened and investors appeared less concerned about Beijing’s tightening moves. US Steel (NYSE:X) and AK Steel (NYSE:AKS) jumped 6.6% and 6.4%, respectively, after Ernst & Young said the value of mining merger and acquisitions may more than double this year after declining over the past two years.
Oil and gas shares advanced 2.5%. Chevron (NYSE:CVX) jumped 2.8% after Sanford C. Bernstein raised the shares to “outperform” from “market perform.” Financials advanced 2.4%, following early morning reports from British bank Barclays (NYSE:BCS) that its profits had more than doubled from year-ago levels. Bank of America (NYSE:BAC) jumped 4.9% after reporting a drop in credit card delinquencies in January; a CLSA Securities upgrade sent Capital One (NYSE:COF) shares up jumped 4.5%.
Release of the FOMC minutes later today is unlikely to provide much additional insight into Fed monetary policy plans after Fed Chairman Bernanke’s published testimony last week.
On the earnings front, companies reporting their numbers include Applied Materials (NASDAQ:AMAT), Deere (NYSE:DE), Devon Energy (NYSE:DVN), Genzyme (NASDAQ:GENZ), Hewlett-Packard (NYSE:HPQ), Host Hotels (NYSE:HST), NetApp (NASDAQ:NTAP), Nvidia (NASDAQ:NVDA), and Priceline.com (NASDAQ:PCLN).
