Global Markets Overview – 06/07/2012
FROM MORRISON SECURITIES PTY. LTD:
U.S. STOCK MARKETS
U.S. stocks posted their biggest percentage gains of the year Wednesday as investors read remarks by central bankers in Europe and the U.S. as a signal that more monetary stimulus may be on the way.
The Dow Jones Industrial Average jumped 286.84 points, or 2.4%, to 12414.79, and the euro rose 1% to trade well above $1.25. The Dow’s gain comes one day after the blue-chip index snapped a four-day losing streak, putting it back in positive territory for the year.
The benchmark hadn’t seen back-to-back gains since late April. Bank of America climbed 7.6%, its best performance since January, while United Technologies jumped 3.9%.
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The Standard & Poor’s 500-stock index rose 29.63 points, or 2.3%, to 1315.13 and the Nasdaq Composite climbed 66.61 points, or 2.4%, to 2844.72.
The Dow and S&P percentage increases were the biggest since December, while the Nasdaq’s was the largest in more than two weeks.
The gains came as European Central Bank President Mario Draghi said markets were underestimating political leaders’ commitment to addressing the euro crisis.
That suggested to some investors that the ECB would be prepared to act once that happened. Mr. Draghi said that a few members of the ECB’s rate-setting committee were in favor of a rate cut.
The Fed’s Beige Book report on economic conditions across its 12 districts showed that the economy continued to expand at a moderate pace.
On Thursday, Fed Chairman Ben Bernanke will appear before Congress. That comes ahead of the Fed’s next rate-setting meeting on June 19 and 20.
All of the Dow components and all 10 sectors of the S&P 500 traded in positive territory. Only 11 of the S&P 500 components traded lower.
Leading the gains were financial and energy stocks, which have suffered the most in recent weeks amid rising concerns about an economic slowdown.
Bank of America, United Technologies and Exxon Mobil were among the Dow leaders. Home builder stocks also leaped after Hovnanian Enterprises reported strong quarterly earnings and said it believes the industry is in the early stages of a recovery. Hovnanian soared 18%, lifting other homebuilder shares. PulteGroup jumped 7.4%, while Home Depot rose 3.4%.