US stocks rise ahead of stress test criteria
Monday, 27 April 2009
The Dow Jones Industrial Average was up 125 points at 8083, within 50 points of turning positive for the seventh consecutive week, helped by gains in two of its components that posted results late Thursday.
Microsoft was up 8.4pc despite reporting that its earnings fell 32pc, hurt by its first decline in sales as a public company. American Express's net income rose 24pc on an 18pc increase in sales. Its shares were up 20pc, according to The World Street Journal Thursday.
Outside the Dow, Ford Motor climbed 17pc after it said it lost $1.4 billion in the first quarter but burned through less cash as it continued to restructure without government aid.
Online retailer Amazon.com was up 6.7pc after it posted a better-than-expected 24pc rise in first-quarter profit, fueled by strong sales of its Kindle device. Amazon's gains helped spur the technology-oriented Nasdaq Composite Index, which was recently 2.2pc higher at 1689, its highest intraday level since Nov. 5, 2008. If it closed for the month here, it would be the strongest two-month gain since October and November 2002, which turned out to be the beginning of the last bull market.
The relative strength of the generally smaller technology and consumer stocks on the Nasdaq represents a growing bet on an economic recovery, traders say.
"This is a breakout and it looks like it has more legs to it," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. For the broader market, "you want technology leadership," Detrick said. "When you have a true - I don't want to say bull market yet - but a strong trending market, technology is one thing you want to perform."
The S&P 500 was up 1.5pc, led by gains of more than 3pc each in its consumer and materials sectors and came within a point of turning positive for its seventh straight weekly gain.
The financial sector was also gaining by about 1.9pc. Treasury Secretary Timothy Geithner is expected to detail the methodology of the "stress tests" regulators have given to the 19 largest US financial institutions. Bank stocks have traded erratically all week as investors await more information on the tests. Thursday, a late bounce in the sector helped drive stock indexes higher in the final half hour of trade.
"The bank stress program is about how much banks have written down the securities that have plagued their balance sheets. It's the remaining open question and if bank balance sheets continue to be a rat's nest, we'll continue to languish," said Larry Smith, chief investment officer for Third Wave Global Investors.
Shares of major banks were mixed in recent action. The KBW Banks Index rose 1.2pc. Bank of America was up 4.4pc, Citigroup slipped 0.3pc, J.P. Morgan Chase rose 2.2pc and Wells Fargo added about 5.3pc.
Oil futures rose $1.92, pushing them back above the psychologically important $50 a barrel level. Though new inventory data this week showed US stockpiles of crude at historic highs, traders and analysts say the market is beginning to reflect early bets on summer driving season.
Microsoft was up 8.4pc despite reporting that its earnings fell 32pc, hurt by its first decline in sales as a public company. American Express's net income rose 24pc on an 18pc increase in sales. Its shares were up 20pc, according to The World Street Journal Thursday.
Outside the Dow, Ford Motor climbed 17pc after it said it lost $1.4 billion in the first quarter but burned through less cash as it continued to restructure without government aid.
Online retailer Amazon.com was up 6.7pc after it posted a better-than-expected 24pc rise in first-quarter profit, fueled by strong sales of its Kindle device. Amazon's gains helped spur the technology-oriented Nasdaq Composite Index, which was recently 2.2pc higher at 1689, its highest intraday level since Nov. 5, 2008. If it closed for the month here, it would be the strongest two-month gain since October and November 2002, which turned out to be the beginning of the last bull market.
The relative strength of the generally smaller technology and consumer stocks on the Nasdaq represents a growing bet on an economic recovery, traders say.
"This is a breakout and it looks like it has more legs to it," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. For the broader market, "you want technology leadership," Detrick said. "When you have a true - I don't want to say bull market yet - but a strong trending market, technology is one thing you want to perform."
The S&P 500 was up 1.5pc, led by gains of more than 3pc each in its consumer and materials sectors and came within a point of turning positive for its seventh straight weekly gain.
The financial sector was also gaining by about 1.9pc. Treasury Secretary Timothy Geithner is expected to detail the methodology of the "stress tests" regulators have given to the 19 largest US financial institutions. Bank stocks have traded erratically all week as investors await more information on the tests. Thursday, a late bounce in the sector helped drive stock indexes higher in the final half hour of trade.
"The bank stress program is about how much banks have written down the securities that have plagued their balance sheets. It's the remaining open question and if bank balance sheets continue to be a rat's nest, we'll continue to languish," said Larry Smith, chief investment officer for Third Wave Global Investors.
Shares of major banks were mixed in recent action. The KBW Banks Index rose 1.2pc. Bank of America was up 4.4pc, Citigroup slipped 0.3pc, J.P. Morgan Chase rose 2.2pc and Wells Fargo added about 5.3pc.
Oil futures rose $1.92, pushing them back above the psychologically important $50 a barrel level. Though new inventory data this week showed US stockpiles of crude at historic highs, traders and analysts say the market is beginning to reflect early bets on summer driving season.