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November 24, 2010 16:18 ET (21:18 GMT)surged
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Date Posted: 24/11/10 21:34:04
DJIA Closes Up 1.37% At 11187.13; Boeing, UTX, Caterpillar Lead
25/11/2010 8:18AM
By Jonathan Cheng
U.S. investors geared up for the holiday shopping season by snapping up retail stocks, erasing all of Tuesday's sharp declines as the latest economic data painted an improving picture for U.S. growth.
The Dow Jones Industrial Average soared 150.91 points, or 1.37%, to finish at 11187.28 Wednesday, after falling 142 points Tuesday. The Standard & Poor's 500-stock index gained 17.62 points, or 1.49%, to 1198.35 and the Nasdaq Composite added 48.17 points, or 1.93%, to 2543.12.
U.S. markets will be closed Thursday, and open for just half a day on Friday. Trading on the Friday after Thanksgiving has generally been strong, rising 12 of the last 16 years, although last year's 1.5% decline was the worst for that day since 1987.
Wednesday's gains were led by a surge in consumer discretionary and industrial stocks, after the latest data showed consumers more upbeat on spending. The Reuters/University of Michigan consumer sentiment index rose to 71.6 in November, up from 67.7 in the prior month, topping expectations. Those numbers came after data showed the labor market is on the mend, as the number of U.S. workers filing new claims for jobless benefits fell by more than expected last week to the lowest level since July 2008.
At the same time, Americans' personal income grew at a faster pace than they have for much of the year and consumer spending expanded. But orders for durable goods marked the sharpest drop in almost two years, and new home sales fell for the fourth time in the last six months.
Jewelry retailer Tiffany added to the enthusiasm over retail spending, jumping $3.06, or 5.3%, to 61.33 after reporting a 27% increase in earnings. The iconic jeweler topped earnings expectations and offered encouraging remarks about the holiday sales period. Coach added 2.06, or 3.8%, to 56.63, while Polo Ralph Lauren gained 3.26, or 3.1%, to 109.82. Amazon.com jumped to a fresh all-time high, soaring 9.05, or 5.4%, to 177.25, ahead of the gift-giving season.
"With people getting new jobs, those with jobs feel more confident about hiring and are more confident to spend, whereas before they may have said, "I don't know where this is going, so I'm going to batten down the hatches,'" said Mark Schultz, portfolio manager of MTB Mid-Cap Growth Fund, who holds both Coach and Tiffany shares. "With both Coach and Tiffany, you have the benefit of very good management positioning their companies through the downturn, where now they can benefit from a more positive top-line environment."
Among other stocks in focus, shares of Deere shed 11 cents, or 0.14%, to 76.23 after the machinery maker beat earnings estimates but painted a gloomier-than-expected short-term outlook.
Oracle added 55 cents, or 2%, to 27.74 after a jury ruled that German software group SAP must pay Oracle $1.3 billion because of intellectual-property theft. SAP was off 62 cents, or 1.3%, at 48.07.
American depositary shares of UBS finished higher by five cents, or 0.32%, to 15.82 after the trustee recovering money for victims of Bernard Madoff's Ponzi scheme accused UBS of actively participating in the fraud and sought $2 billion from the Swiss bank.
Investors seemed to look past overseas concerns and bought aggressively, even as the U.S. military stepped up its presence around the Korean peninsula and the Irish government outlined new austerity measures.
"We had some decent data, but we still have some pretty strong headwinds in the U.S. and globally, with Europe's budget problems and the political tensions in North Korea--it's somewhat amazing that people can shift their moods so quickly with all of that still out there as an unresolved issue," said Dorsey Farr, partner at Atlanta-based investment advisory French Wolf & Farr.
In Europe, Ireland's government outlined EUR15 billion in spending cuts and tax increases over four years that are intended to reduce the budget deficit to 9.1% of gross domestic product in 2011. At the same time, Germany's Ifo business-sentiment index surged to its highest levels since the nation was reunified.
Those developments helped the Stoxx Europe 600 finish with a 1% gain, though the euro continued to slide even after its steep multiday declines, trading recently at $1.3324, down from $1.3370 late Tuesday.
Oil futures surged 3.2% to settle at $83.86 a barrel after a modest rise in weekly U.S. oil inventories calmed worries about a much larger increase. Gold slipped, meantime, while Treasurys fell, pushing the yield on the benchmark 10-year note up to 2.914%, the highest yield since early August.
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=mVKII5ha6f8pwiN47B43tw%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
November 24, 2010 16:18 ET (21:18 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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