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World stock markets rally

16 September 2009 08:00 (UTC +04:00)

Baku- APA-Economics. Investors waded deeper into the stock market Tuesday as a batch of economic reports provided mostly upbeat signals about the economy, AP reported.
Retail sales jumped in August by the biggest amount in three years, but inflation at the wholesale level rose at double the rate analysts expected. The Dow gained about 75 points in the final hour of trading.
Beyond that, the Federal Reserve said manufacturing in the New York region improved for a second straight month in September. Fed Chairman Ben Bernanke also said that the worst recession since the 1930s is "very likely" over.
Investors have made big bets in recent months that the economy is strengthening, and want to see confirmation that those bets are correct. The Standard & Poor’s 500 index, the benchmark for many mutual funds, has surged 55.1 percent since skidding to a 12-year low in March.
Despite widespread predictions of a pullback, stocks have been logging nearly unbroken gains throughout September as investors remain reluctant to call an end to the market’s rally. This market has sometimes seemed impervious to the type of bad news that might have punctured a rally six months ago.
In keeping with that pattern, the report Monday showing a 1.7 percent jump in wholesale prices in August gave investors some pause but hardly caused a panic. That’s a big difference from three months ago when fears of inflation and a weaker dollar were roiling bond investors, sending fear spilling over into the stock market.
Disappointing earnings reports from two major retailers, Best Buy Co. and Kroger Co., also failed to push the stock market off course.
As occurred Monday, stocks gained strength in the afternoon after zigzagging in early trading. That signals that investors who missed the market’s surge are looking for chances to get in.
"You want to say that the market is a little bit tired after the run we’ve had yet we continue to grind higher," said Ryan Larson, senior equity trader at Voyageur Asset Management.
In late afternoon trading, the Dow rose 74.29, or 0.8 percent, to 9,701.09. The S&P 500 index rose 5.18, or 0.5 percent, to 1,054.52, while the Nasdaq composite index rose 12.06, or 0.6 percent, to 2,203.84.
About two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.1 billion shares compared with 877 million shares traded at the same point Monday.
The day’s news didn’t dent investors’ hopes for a recovery. The government said retail sales jumped 2.7 percent in August â€” well above the 2 percent gain predicted by a Thomson Reuters poll of economists. Even after stripping out the sizable gains from the government’s popular Cash for Clunkers program, sales rose 1.1 percent, well beyond the rise of 0.4 percent expected by analysts.
The Fed’s index on New York manufacturing rose to its best level since late 2007.
Best Buy fell $1.92, or 4.8 percent, to $38.49 as weaker sales hurt the electronics retailer’s results. The company did raise its sales and profit forecasts for the year, saying customer traffic is stabilizing.
Grocery store chain Kroger also reported earnings that fell short of expectations and cut its earnings forecast. Shares slid $1.69, or 7.6 percent, to $20.42.
Martha Stewart Living Omnimedia Inc. surged $1.11, or 16.2 percent, to $7.96 after Home Depot Inc. said it would start selling Martha Stewart home improvement products in 2010, when the company’s deal with Kmart ends.
In other trading, bond prices fell as the dollar rose. The yield on the benchmark 10-year Treasury note edged up to 3.46 percent from 3.43 percent late Monday.
Crude oil rose $2.07 to settle at $70.93 a barrel on the New York Mercantile Exchange.
The Russell 2000 index of smaller companies rose 4.53, or 0.8 percent, to 604.56.
The dollar was mixed, while gold prices rose.
Overseas, Britain’s FTSE 100 rose 0.5 percent, Germany’s DAX index rose 0.2 percent, and France’s CAC-40 added 0.6 percent. Japan’s Nikkei stock average rose 0.2 percent.