Equities: Rally Revives as DJIA Hits Year's Highs

4:11 PM, Oct 9, 2009 --

• NYSE up 24.86 (0.4%) to 7,015.53.
• DJIA up 78.07 (0.8%) to 9,865.
• S&P 500 up 6.01 (0.6%) to 1,071.
• Nasdaq up 15.35 (0.7%) to 2,139.

GLOBAL SENTIMENT

• Hang Seng up 0.3%
• Nikkei up 1.87%
• FTSE up 0.14%

UPSIDE MOVERS

(+) IFLO sold to Kimberly-Clark for $12.65 a share.

(+) AVNR reports Phase 3 results for Zenvia; one dose meets primary endpoint.

(+) SVNT gains after announcing share pricing.

(+) THLD continues evening gain that followed positive melanoma trial data.

(+) PSTA inks merger deal.

DOWNSIDE MOVERS

(-) DB upgraded.

(-) SPPI gets FDA response letter for FUSILEV.

(-) ACOR says documents on Fampridine from FDA panel out.

(-) LXRX pricing shares.

MARKET DIRECTION

Stocks advanced Friday and are broadly higher for the week. The DJIA is up 4% on the week, while the Nasdaq and the S&P 500 each tally a 4.5% rise. It's the best performance, in fact, since July and lands the Dow at new 2009 highs. The weekly gains follow back-to-back weekly declines.

The market's seven-month rally was back in full swing this week after Aloca (AA), one of the first companies to report Q3 earnings, topped the Street.

The dollar recovered a touch from 14-month lows in the wake of Thursday commments from Federal Reserve Chairman Ben Bernanke, who reassured markets that the U.S. central bank will wind down its aggressive stimulus measures when the time is right.

Bernanke said last night that the Federal Reserve would continue to prop up the economy for an extended period but can't do so indefinitely for fear of triggering inflation. At a Fed conference, Bernanke said policymakers are working on plans to terminate support as recovery sets in. An obvious point of view by most accounts, but nonetheless comments that some observers said may be the Fed chief's way of beginning to prepare markets for a policy change.

The Commerce Department also provide some lift this morning after reporting that the trade deficit declined 3.5% to $30.7 billion in August, as imports fell on lower oil demand. Economists expected the deficit to rise to $33 billion, or 3.3% from July's level, which was the highest in six months. Exports of goods and services edged up 0.2%, an encouraging sign that the global economy is strengthening. But the decline in imports shows that domestic consumption is still weak.

Bond prices tumbled, extending the previous day's losses as the market readied to absorb $71 billion of new supply auctioned off this week in the government's ongoing efforts to fund its stimulus programs.

Crude gained $0.08 or 0.1% to $71.77 a barrel Friday. The November contract advanced 2.6% on the week.

Crude briefly crossed into negative territory earlier Friday, pressured by a stronger dollar, which gained in the wake of Bernanke's comments. Oil prices were supported by generally improving economic news this week. On Friday, the International Energy Agency also raised its forecasts for global oil demand by 200,000 barrels a day for this year and by 350,000 barrels a day for 2010.

October gold closed down $7.60 at $1,047.80 an ounce but still gained 4.3% from last Friday's close. On Thursday, the contract rose as high as $1,060.40 an ounce, the highest ever for a front-month contract. Gold for December delivery finished down $7.70, or 7.3%, at $1,048.60 an ounce. The contract still gained 4.5% for the week. On Thursday, it hit record intraday high of $1,062.70.

Comments

[MarketGuy:]

I wouldn't quite call this a rally "revival" on this super low volume.

Oct 09 06:45 PM

[Plan B Econ...:]

This 'high' talk all depends on your basis of measurement. By no means are US markets at a high when measured on real inflation-adjusted terms.

www.planbeconomics.com.../

Oct 10 12:27 AM

[Andrew Butter:]

The intr-day high was 9,937.72 on 23rd September

Oct 10 05:38 AM

[David White:]

New High on the DOW might normally mena the markets are going higher. However, the Office of the Comptroller of Currency is now warning that the results of banks may be much worse than most people are expecting.

MarketWatch:
Thinking the worst is behind the industry, investors began looking to 2010 and 2011 when banks should be a lot healthier, according to Richard Bove, an analyst at Rochdale Securities. Third-quarter results will make that leap of faith harder to maintain, he said.

"Third-quarter earnings for most banks, particularly the regional lenders, will be extraordinarily negative," Bove said.

He estimates that about 60% of banks will report losses in the period as nonperforming assets continue to grow and charge-offs remain very high. Lenders will also have to increase reserves because they didn't bolster them enough during the second quarter, Bove added.

Oct 11 01:50 AM

[ebworthen:]

Please, buy lots and lots of equities, the banks and insurance companies and government need your hard earned cash.

Oct 11 02:32 AM