After Federal Reserve Chairman Ben Bernanke’s soothing words Tuesday, markets found another set of reasons to accelerate their gains as a pair of upbeat economic data Wednesday fueled optimism that the world’s largest economy is growing again. A pick up in M&A activity helped sentiments as Wall Street moved closer to its highest level in a year. Commodity stocks rose, helped by higher crude prices. A weak dollar helped stocks of the companies doing business abroad.
On the New York Stock Exchange 1.58 billion shares exchanged hands as advancing issues beat those that declined in price by an almost five-to-one margin. The Dow Jones industrial average gained 108.30 points, or 1.1%, to 9,791.71. The broad S&P 500 index rose 16 points, or 1.5%, to 1,068.76. The NASDAQ composite rose 30 points, or 1.5%, to 2,133.15. Since bottoming at a 12-year low in March, the Dow has gained 47% and the S&P 500 has gained 55%. The Nasdaq is up 65% since hitting its 6-year low.
As traders’ risk appetite grew, the US dollar extended its recent decline, falling to its lowest level in almost a year against a basket of currencies. The DJ-UBS broad-based commodity index jumped 2.24%, with crude prices up 2.2%. Treasury prices continued to decline, with the price of the 10-year off 8/32 as its yield rose to 3.475%; gold prices continued their recent advance, rising $13.90, or 1.4%, to close at $1018.
All but four DJIA components recorded gains Wednesday and among the S&P500 industry groups only telecommunication shares declined, easing 0.6%, after UBS (NYSE:UBS) downgraded Verizon (NYSE:VZ) to “neutral” from “buy,” citing pressure on its wireless operations.
Financial stocks showed strong support, up 3.3%, with American Express (NYSE:AXP) adding 3.4% on a Sandler O’Neil upgrade to “hold” from “sell,” with a 12-month price target of $35. JP Morgan (NYSE:JPM) gained 3.4% and Bank of America (NYSE:BAC) rose 2.7%. Oil and gas shares advanced 2.3% on an early morning report of a major oil discovery near Sierra Leone from a consortium of oil firms led by Anadarko Petroleum (NYSE:APC). Weekly crude inventory levels dropped to their lowest level since January, declining 4.73 million barrels to 332.8 million barrels. The decline was more than double what analysts had expected.
A growth in industrial production helped share of basic materials (+2.1%) and industrial (+1.7%). Alcoa Inc. (NYSE:AA) climbed 3.4%. General Electric (NYSE:GE) shares jumped 6.3% on the back of improved manufacturing outlook. The shares also reflected anticipation in front of today’s analyst meeting, showcasing the company’s technologically-driven opportunities for long-term growth, as well as an analyst upgrade. Shares of Unites States Steel Corp. (NYSE:X) added 1.7%.
