Friday, September 7, 2012

Dow, S&P hit best levels since 2007

NEW YORK: US stocks surged to new multi-year highs Thursday helped by positive economic data and the European Central Bank's new plan to help ailing eurozone countries in the bond market.

The S&P 500 and the Dow both registered their best closing levels since December 2007, holding onto strong gains achieved as soon as the markets opened.

Banks led the march higher, with Bank of America putting on 5.0 per cent and JPMorgan Chase gaining 4.3 per cent.

Key tech stocks also registered strong gains, with Microsoft rising 3.1 per cent, Google adding 2.7 per cent, and Cisco surging 4.4 per cent.

The boost came ahead of the release of important jobs numbers Friday, and set a positive background for President Barack Obama's much-awaited address Thursday night to the Democratic Party's convention, kicking off the final stretch of the presidential race.

Obama, harried by charges he has not done enough for the economy, is running neck and neck with Republican rival Mitt Romney.

The Dow Jones Industrial Average finished up 244.52 points (1.87 per cent) at 13,292.00.

The S&P 500-stock index advanced 28.68 (2.04 per cent) to 1,432.12, while the tech-heavy Nasdaq jumped 66.54 (2.17 per cent) to 3,135.81.

Markets took off from the opening bell and pushed higher as the ECB confirmed its bond market intervention plan, a program aimed at lowering the borrowing costs of the eurozone's economically weaker governments and, ultimately, shoring up the eurozone.

The ECB plan "is another step in the right direction that could restore confidence in the euro," said Jason Schenker at Prestige Economics.

"It may not be the ideal solution, but ECB and eurozone member political will appears resolute."

Also helping was encouraging data showing growth picking up modestly in the US services sector and, tentatively, improvement in the jobs market.

The Dow's 30 blue chips were all in the positive: General Electric added 3.2 per cent, Caterpillar 2.5 per cent, and Intel 2.9 per cent.

Amazon jumped 2.1 per cent as it unveiled a larger Kindle Fire tablet, taking on the Apple iPad. Apple, the world's largest company, market capitalization-wise, was a laggard for the day, rising just 0.9 per cent.

Also on the Nasdaq, eBay gained 3.7 per cent while Seagate was a rare loser, shedding 2.6 per cent after getting a rating cut from analysts at Needham & Co.

Facebook joined the surge, rising 2.1 per cent.

Bond prices tumbled. The yield on the 10-year Treasury leaped to 1.67 per cent from 1.59 per cent Wednesday, while the 30-year yield rose to 2.80 per cent from 2.70 per cent. Bond yields move inversely to prices.

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