U.S. stocks snap back with major rally

Sri Lankan News.Net
Wednesday 1st September, 2010

U.S. stocks were sharply higher Wednesday joining a global market rally which kicked off September in style.

Commodity prices roared as news on the economy took center-stage in the United States, China and Australia.

Treasury bonds softened in price, as did the U.S. dollar and other safe-haven currencies, the Swiss franc and Japanese yen.

At the close of trading Wednesday the Dow Jones Industrials were up 254.75 points or 2.54% to 10,269.75.

The Nasdaq Composite was up 62.81 points or 2.97% at 2,176.84.

The Standard and Poor's 500 was up 30.96 points or 2.95% at 1,080.29.

Manufacturing data in China surprised analysts with reports beating expectations, while in Australia a better-than-expected GDP prompted a reassessment of Australian stocks and the Australian dollar, helped along by sharp 2%-plus gains in copper and nickel prices.

“It’s a combination of better industrial data out of China and the ISM data here in the United States,” Mark Bronzo, an Irvington, New York-based fund manager at Security Global Investors, which oversees $21 billion was quoted by Bloomberg as saying. “People have become extremely negative and as a result the data was better than expected and you’re seeing a sharp snap back.”

The U.S. Institute for Supply Management’s gauge of manufacturing climbed to 56.3 in August from 55.5 in July. Analysts had expected the index would decline to 52.8, according to the median estimate in a Bloomberg survey.

“The data tips the scale away from a recessionary outcome,” Myles Zyblock, the Toronto-based chief institutional strategist at Royal Bank of Canada, wrote in a note to clients Wednesday.

China’s purchasing managers’ index graduated to 51.7 from 51.2, above expectations, while Australia’s economy expanded 1.2% in the second quarter.

On foreign exchange markets the euro had climbed to 1.2807 around the New York close Wednesday. The Japanese yen nudged down to 84.40, while the Swiss franc was unchanged at 1.0148.

The Australian dollar was the big gainer, putting on nearly two cents, to .9098. Its commodity counterpart, the Canadian dollar, was also higher at 1.0508. The British pound rose to 1.5449.

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