US and European stock markets up

US and European stock markets up
# 10 September 2009 09:06 (UTC +04:00)
Baku- APA-Economics. Stocks pulled well off their highs of the day Wednesday after the Federal Reserve said the nation’s economy was stabilizing but also that problems remain.
The Fed’s snapshot of 12 economic regions found that economic activity was "stable," showed "signs of stabilization" or had "firmed" in all areas except the St. Louis region. It also found, however, that consumer spending is expected to increase only because of buying of automobiles generated by the government’s brief Cash for Clunkers program.
The prolonged slump in consumer spending has been one of the most serious points of worry for economists, and the Fed’s warning about it deflated some of the market’s optimism. About 70 percent of the U.S. economy depends on spending by consumers.
Stocks had been higher earlier in the day as investors grow more optimistic about profits at big industrial companies. Stocks like Boeing and General Electric saw some of the biggest gains. Investors kept an eye on the weak dollar, which lifted some commodities prices.
Matt Lloyd, chief investment strategist at Advisors Asset Management, said stocks pulled off their highs following the Fed’s report because many investors are fearful of a correction following a 50 percent surge in the market over the past six months.
"To me there is no conviction behind it," he said of the market’s recent gains.
In late afternoon trading, the Dow Jones industrial average rose 32.50, or 0.3 percent, to 9,529.84. It had been up as much as 80 points ahead of the report. The Standard & Poor’s 500 index gained 5.36, or 0.5 percent, to 1,030.75, while the Nasdaq composite rose 19.52, or 1 percent, to 2,057.29.
The Russell 2000 index of smaller companies rose 6.83, or 1.2 percent, to 583.21.
Two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 826.4 million shares compared with 790 million shares traded at the same time Tuesday.
Jeff Kleintop, chief market strategist at LPL Financial Services, said a break in the rally could be good for the market to keep stocks from racing too high, too quickly.
"I think we’re maybe due for a little bit of consolidation," he said.
Light, sweet crude rose 20 cents to $71.30 per barrel on the New York Mercantile Exchange.
Gold prices hovered near $1,000. It crossed that mark Tuesday for the first time since February.
Industrial shares were the biggest gainers, as investors bet that higher commodity prices will translate to increased profits if the economy strengthens. The weaker dollar also makes the goods of U.S. exporters cheaper outside the U.S.
Caterpillar Inc. was among the strongest advancers of the 30 stocks that make up the Dow industrials. Shares of the maker of construction and mining equipment rose $1.31, or 2.8 percent, to $48.28.
Airplane maker Boeing Co. rose 90 cents, or 1.8 percent, to $50.40, while General Electric Co. rose 31 cents, or 2.1 percent, to $14.81.
Aircraft maker Textron Inc. rose 26 cents, or 1.5 percent, to $18.24 after the company said it would leave its 2009 profit forecast unchanged.
Bond prices were mixed after the Fed’s report. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.49 percent from 3.48 percent late Tuesday.
Haag Sherman, chief investment officer at Salient Partners in Houston, said investors’ demand for stronger returns is weighing on the dollar, though he notes that the 10-year Treasury note has held its ground as some investors remain skeptical about a rebound in the economy.
"The 10-year really hasn’t been punished as much lately. I think there is a tug-of-war between the equity and the bond market."
Overseas, Japan’s Nikkei stock average fell 0.8 percent. Britain’s FTSE 100 rose 1.2 percent, Germany’s DAX index rose 1.7 percent, and France’s CAC-40 advanced 1.3 percent. Source: AP