U.S. Stocks Advance as Obama Budget Asks for More Bailout Funds
Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. gained at least 7 percent. Exxon Mobil Corp. and Chevron Corp. advanced as oil climbed to a one-month high. General Motors Corp. slid 3.5 percent after reporting a $9.6 billion fourth- quarter loss. European stocks climbed for the first time in five days as Royal Bank of Scotland Group Plc planned to put assets into a U.K. government insurance program and UBS AG replaced its chief executive officer.
“You’ve got to be glued to your screen, not only to watch prices, but to see what’s coming out of Washington,” said Michael Mullaney, a Boston-based money manager at Fiduciary Trust Co., which oversees $9.5 billion. “Details are starting to flow into the market and that’s what the market needs.”
The Standard & Poor’s 500 Index added 1.1 percent to 773.47 at 10:20 a.m. in New York. The Dow Jones Industrial Average gained 84.11 points, or 1.2 percent, to 7,355 and the Russell 2000 Index increased 0.5 percent. Five stocks rose for every two that fell on the New York Stock Exchange.
Benchmark indexes advanced even after government reports showed orders for durable goods decreased more than economists forecast, while initial jobless claims unexpectedly rose.
More details on Obama’s first budget request, which also includes an overhaul of the U.S. health-care system and a program to cut carbon-dioxide emissions, will be released later today. A senior administration official, speaking on condition of anonymity, said the White House hasn’t decided whether the $750 billion in additional aid will be needed. He said it will be put in the budget as “placeholder.”
Citigroup, the New York-based bank bailed out by the U.S. for $52 billion, rallied 7.1 percent to $2.70. Bank of America jumped 8.3 percent to $5.59. Wells Fargo added 8.3 percent to $14.56.
Europe’s Dow Jones Stoxx 600 Index gained 2 percent, while the MSCI Asia Pacific Index declined 0.9 percent.
U.S. stocks fell yesterday as dividend cuts triggered a sell-off in insurers and an unexpected drop in home sales dragged down industrial shares, overshadowing speculation that banks will pass the government’s so-called stress tests.
Exxon climbed 1 percent to $72.80. Chevron increased 1.3 percent to $64.33. The S&P 500 Energy Index gained 1.6 percent.
Rowan Cos. rallied 7.4 percent to $11.98 for the steepest gain among S&P 500 oil producers. The oil and natural-gas driller reported per-share earnings that beat the average analyst estimate by 18 percent.
Crude oil for April delivery climbed 4.2 percent to $44.30 a barrel on the New York Mercantile Exchange, the highest intraday price since Jan. 27.
The S&P 500 is down 14 percent this year after losing 38 percent in 2008, its biggest annual tumble since 1937. Still, fewer stocks are falling to 52-week lows, a sign that the worst of the market’s losses may be over, according to Bespoke Investment Group LLC.
Goldman Sachs Group Inc. cut its year-end forecast for the S&P 500 to 940 from 1,100 and said the index may fall as much as 15 percent in “the near term” as earnings decline.
“We have seen some progress with regard to two critical signposts on the way to a sustained rally: passage of a fiscal stimulus plan and some clarity surrounding the Financial Stability Plan,” wrote strategist David Kostin. “However, we have yet to see any improvement in two other key signposts: home price stabilization and declines in financials’ losses.”
Fluor Corp. climbed 8.1 percent to $35.63. The largest publicly traded U.S. engineering firm reported profit of $1.04 a share in the fourth quarter, beating the average analyst estimate by 14 percent.
Las Vegas Sands Corp. surged 18 percent to $2.54. Sanford C. Bernstein & Co. initiated coverage of the casino company controlled by Sheldon Adelson with an “outperform” rating.
Sears Holdings Corp. rose 7.5 percent to $38.53. The largest U.S. department-store chain reported fourth-quarter profit excluding some items of $2.94 per share, beating the average $2.69 analyst estimate.
This article was originally posted on Bloomberg
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