Increased activity on the merger and acquisition front and promising signs that the economic downturn is easing sent U.S. stocks higher Tuesday as traders, back after a long weekend, picked up energy and commodity stocks. With traders turning to riskier bets, Treasury prices sank, sending corresponding yields higher. Positive factors sent gold prices beyond the $1,000 per ounce mark, before prices eased a little to settle at $997.80. Dollar declined 1.1% to $1.4498 per euro. Copper prices gained 3.1% on improved global recovery prospects.
The 30-share Dow Jones industrial average rose 56 points, or 0.6%, to 9,497.34 and the S&P 500 index added 9 points, or 0.9%, to 1,025.39, its highest close in 11 months. The tech-heavy NASDAQ added 19 points, or 0.94%, to close at 2,037.77 points. On the New York Stock Exchange, advancing issues outpaced those that declined three to one on volume of 1.32 billion shares. However, a jump in the CBOE Vix volatility measure, which rose 1.4% to 25.62, added a note of caution to the upbeat mood.
Dollar’s plunge to an 11-month low was also due to a Monday release from the United Nations, which again called for less dependence on the greenback as the premier global reserve currency. Indications that China would diversify some of its interests into gold also hurt the dollar, although the size of China’s reserves mitigates against much impact. Nevertheless, the news helped gold prices. This morning’s news indicated Barrick Gold (NYSE:ABX) is planning to raise up to $3.5 billion through a new share offering priced at $36.95 per share.
Yesterday, General Electric (NYSE:GE) was the leading gainer on the DJIA after being upgraded by JP Morgan (NYSE:JPM). Costco (NASDAQ:COST) advanced 2.3% after two brokerages upgraded the stock. Among tech issues, IBM (NYSE:IBM) retreated 0.3% after it was downgraded; however, the firm noted it is “well ahead” of its 2010 earnings target of $10-$11 per share. Advanced Micro Devices (NYSE:AMD) surged 14.6% as Barclays Capital (NYSE:BCS) upgraded the shares to “outperform.” AIG (NYSE:AIG) shares slumped 10.5% after Credit Suisse (NYSE:CS) downgraded the stock to “underperform,” noting “little to no value for common equity” remains.
Nine of the ten S&P industry groups recorded gains Tuesday , with oil and gas (+2.7%) and basic material shares (+2.1%) leading the list of gainers. Only healthcare shares registered declines, declining 0.3%. Crude prices spiked $3.31 to $71.33 on expectations today’s OPEC meeting will see no change in the production levels. Moreover, Goldman Sachs (NYSE:GS) maintained a favorable long-term view on the group, saying there is an “increasing evidence of a stronger-than-expected recovery in global industrial activity.” Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) shares gained 2.2% and 2.1%, respectively. Among basic material issues, Alcoa (NYSE:AA) rose 3.5% to $12.60.
In today’s Presidential appearance before a rare joint session of Congress, President Obama will attempt to resuscitate his healthcare reform package and counter the groundswell of centrist opposition, which has driven his ratings to a low 52% point.
