Dow soars 490 as central banks extend help to Europe
The blue chips see their biggest 1-day gain since 2009. The central banks' move is meant to ensure European banks won't get caught in a cash crunch. China eases credit. Private employers added more than 200,000 jobs in November.
Stocks soared today after a consortium of six central banks acted to make additional funds available to ease strains from Europe’s debt crisis.
The central banks' move sent the Dow Jones industrials ($INDU) surging 490 points, their biggest gain since March 2009 and their first close above 12,000 since Oct. 15. It trimmed losses for U.S. stocks in November substantially. The rally pushed the Dow and the Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, back into positive territory for 2011. Crude oil (-CL) led commodity prices higher.
Stocks in Europe rallied on the news, announced early today. Just before the banks announced their move, China eased bank reserve requirements to try to ensure that a slowdown in its economy doesn't worsen.
This was the biggest international move to shore up global financial stability since the financial crisis of 2008-09. Europe is in such bad shape, the Guardian newspaper reported today, that financial ministers were told Italy was on the brink of insolvency. Late today, Otto Rehn, the European Union's economic and monetary affairs commissioner, told finance ministers they have 10 days to fix the crisis, or the euro will disintegrate.
The Dow closed up 490 points, or 4.2%, to 12,046. The Standard & Poor's 500 Index ($INX) was up 52 points, or 4.3%, to 1,247. The index had closed below 1,200 in the prior six sessions. The Nasdaq Composite Index ($COMPX) was up 105 points, or 4.2%, to 2,620. It was the first close above 2,600 for the Nasdaq since Nov. 16.
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But it is very important to note that the volume was average at best. New York Stock Exchange volume totaled about 1.66 billion shares, a touch better than average. Nasdaq volume was about 2.4 billion shares.
Moreover, the day's volume was light until the last hour of trading. That suggested that many investors appreciate the fragility of the global economy and the risks posed by the deepening financial crisis in Europe. The big volatility is similar to the one-day gains that would hit the market in the autumn of 2008 after the fall of Lehman Brothers.
The central banks' action -- cheered by investors and jeered by many Republican presidential candidates -- signaled that the problem had reached a crisis point, Stanley A. Nabi, chief strategist for the Silvercrest Asset Management Group, told The New York Times. The central banks recognized there was a "lot of danger" in letting the current situation continue, he added.
So far this week, the Dow is up 813 points, the biggest three-day gain since Nov. 22-24, 2008. The S&P 500's three-day gain is its biggest since Nov. 23-25, 2008. The Nasdaq's three-day gain is its largest since last Aug. 13-15.
The Dow finished November up maybe 0.8%, its second monthly gain in a row. It is also a huge improvement from Friday, when the blue-chip index was down 6.1% for the month. The S&P 500 fell 0.5% for the month, with the Nasdaq down 2.4%.
For the year, the Dow is up 4%, with the S&P down 0.9% and the Nasdaq down 1.2%.
Due Thursday are two important reports:
- The November manufacturing report from the Institute for Supply Management.
- The weekly report on jobless claims from the Labor Department.
In addition, automakers will report on November sales. There are indications that November auto sales will be strong. Edmunds.com expects the final tally will be close to 991,296 vehicles sold. That's enough to put the November seasonally adjusted annual rate of car sales at 13.6 million vehicles, the highest rate of the year.
Futures trading suggests a modestly lower open on Thursday.
A day of decent economic news
The Federal Reserve's Beige Book Report showed the economy growing at a "slow to moderate pace." Auto sales were fairly strong, while consumer spending rose modestly. Manufacturing was steady, and bank lending increased slightly. Residential real estate activity remains sluggish.
The Chicago Purchasing Managers Report showed new orders and production expanding to 8-month and 7-month highs, respectively. Nomura Securities noted that the gain in new orders came as inventories declined. The suggests some inventory building will coming in the fourth quarter and could lead to more hiring.
The ADP National Employment Report said private employers added about 206,000 jobs in November. Economists had expected a gain of 130,000. The report is followed by many on Wall Street as a signal of what the government will report on Friday.
The consensus estimate is for the economy to add 112,000 nonfarm jobs, with the unemployment rate holding at 9%.
The National Association of Realtors' pending home sales index rose 10.4% in October from September as buyers took advantage of falling prices and low borrowing costs. The index was also up 7.3% from a year earlier.
|Energy prices -- New York close|
|Wed.||Tues.||Month chg.||YTD chg.|
|Crude oil (-CL)||$100.36||$99.79||7.69%||9.83%|
|Heating oil (-HO)||$3.0251||$3.0336||-1.09%||18.93%|
|Natural gas (-NG)||$3.5500||$3.6330||-9.76%||-19.41%|
|(per mil. BTU)|
|Unleaded gasoline (-RB)||$2.5584||$2.5398||-1.82%||4.29%|
|(per gallon; AAA)|
What the central banks are doing
The central banks' stated goal is to "to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity."
It basically says European banks, which are starting to have troubles funding their daily operations, can borrow dollars more cheaply. The dollar shortage in Europe is the result of a pullback of American money market funds. These cut their investments in European banks by 42% between the end of May and the end of October, according to Fitch Ratings.
As a result, the Guardian said today, banks have been charging each other more and more to turn their euros into dollars and that the rates have been reaching levels close to those when Lehman Brothers collapsed in September 2008.
Mechanically, the program works like this: The central banks will provide cheaper dollar funding to the European Central Bank. The ECB then can offer cheaper dollar loans to cash-strapped European banks.
The program, which will be in place until February 2013, doesn't solve the much larger sovereign-debt problem in Europe.
At best, analysts told The New York Times, the move could buy the 17 nations of the eurozone more time to agree on a broader plan to stabilize financial markets. The ECB holds its next policy meeting Dec. 8, and European leaders are scheduled to meet the next day.
It's hard to find losers in the rally
All 30 Dow stocks were higher, led by JPMorgan Chase (JPM), up 8.4% to $30.97; Caterpillar (CAT), up 8.1% to $97.88, and Alcoa (AA), up 7.6% to $10.02.The laggard: Home Depot (HD), up 0.7%, to $39.22.
A total of 490 S&P 500 stocks were higher -- along with the 10 sectors of the index. Financial, materials and energy stocks are the strongest sectors.
The individual leaders: U.S. Steel (X), up 15.3% to $27.30, coal-producer Alpha Natural Resources (ANR), up 15.1% to $24, and regional bank Regions Financial (RF), up 14.5% to $4.11. Coal producer Peabody Energy (BTU) added 14.3% to $39.23.
The biggest laggard was Netflix (NFLX), down 4.5% to $64.53. Wedbush Securities analyst Michael Pachter cut his rating to "underperform" from "neutral." Marketing costs, he wrote clients, are out of control. The combination of acquiring content and customers is proving extremely costly.
In addition, 97 Nasdaq-100 stocks were higher, led by Joy Global (JOYG) and Wynn Resorts (WYNN), up 10.4% to $91.28 and 9.5% to $120.56, respectively.
Gold, oil move higher
The European move set off a rally in commodities, in large part because the euro was rallying against the dollar.
Gold (-GC) settled up $31.40 to $1750.30 an ounce. Silver (-SI) added 85.4 cents to $32.80 an ounce. Copper (-HG) rose 18.5 cents to $3.58 a pound.
Interest rates moved higher, as the dollar fell and the stock-market rally pulled cash from bonds. The 10-year Treasury yield rose to 2.071% from 1.996% on Tuesday.
Crude oil in New York was up 96 cents to $100.75 a barrel. Brent crude, the benchmark North Sea oil, was down 26 cents to $110.67.
Crude pushed higher Tuesday because of increasing tensions between Iran and Western nations over its nuclear program. Iranian students invaded the British Embassy in Tehran. Britain expelled Iranian diplomats today.
|Short hits from the markets -- New York close|
|Wed.||Tues.||Month chg.||YTD chg.|
|13-week Treasury bill||0.0100%||0.010%||0.00%||-91.67%|
|5-year Treasury note||0.952%||0.928%||-5.84%||-52.78%|
|10-year Treasury note||2.068%||1.996%||-4.92%||-37.43%|
|30-year Treasury bond||3.062%||2.956%||-4.28%||-29.80%|
|U.S. Dollar Index||78.491||79.151||2.86%||-1.01%|
|(in U.S. $)|
|U.S. $ in pounds||£0.637||£0.640||2.41%||-0.64%|
|Euro in dollars||$1.34||$1.33||-2.97%||0.50%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.744||€ 0.750||3.06%||-0.50%|
|U.S. $ in yen||77.70||77.95||-0.93%||-4.51%|
|U.S. $ in Chinese||6.39||6.37||0.24%||-3.38%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
|Crude oil (-CL)||$100.36||$99.79||7.69%||9.83%|
Thomas Jefferson said it best: " If the American people ever allow private banks to control the issuance of their currencies, first by inflation, then by deflation, the banks and corporations that grow up around them will deprive the people of all their prosperity until their children wake up homeless on the continent that their fathers conquered."
It's here folks. We've allowed it to happen. The banks control everything. We need a Thomas Jefferson right now, or Washington, or a Lincoln. The people aren't strong enough to lead themselves. Lambs to slaughter is what we have become. First a penny, then a dime, then a dollar, they take. Then they want more until we are left with nothing. Those in power now or looking to get in power don't care about you or me. They want what the Banks and Bag Men can give them. More Power and More Money!
Gee...I wonder why my broker didn't let me know what the central banks were going to do so I could have taken advantage today of the market "surge". Do you think it's because other than certain politicians, bankers, money managers etc. this was an "inside job"?
I still find it pathetic that politicians can act on "insider information" for buying and selling stocks etc. and it is all perfectly legal but if you and I did it, we would be in jail if caught. I guess it's like it has always been...special privledges for special people..
"Another great insider trading day on wall street"
And it's all perfectly legal under our current laws if you are a congressman etc. They are allowed to trade on insider information but the average person goes to jail if caught. Talk about inequality and a corrupt system. This is one law that needs to be changed immediately.
We give over 600 billion to European banks and the Stock Market goes up so the Very big players can cash in ... we have given in the last 3 years over 7.2 TRILLION to Foreign Banks to keep them afloat .. REMEMBER were broke and had to Borrow it ourself .. its like getting a new credit card you cant afford to give money to others to pay their credit card .... its idiotic.
Sooner or later there is no more money to transfer from pocket #1 to Pocket #2 then to Pocket #3 & #4 ... one day you run out of money and pockets and then its not going to be pretty ....
Bernanke must have called the ECB overnight and gave them a nice speech saying "Yeah just print more money thats all we do here! You look like a hero until a couple years later when inflation and currency devalutaion set in."
This yo-yo stockmarket is making billions for someone. Wall Street is as big a joke as our two political parties.
I sure hope a true leader emerges soon to rescue us citizens. I could care less which party he comes from, just someone who has morals and the publics best intrests as a priority. No more promises.... I want positive action!
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.--- Henry Ford
Very Observant Yamanatic. Stocks scream upward on huge volume in the first ten minutes of trading and then flat line with almost no volume for the next five hours. Isn’t it amazing how millions of investors all acting independently in a free and fair market simultaneously decided that this is the right level for the Dow to be today. I would put the odds of that somewhere around one in Avogadro’s Number. We truly must be living in an age of miracles. (press sarcasm off).
We all know that money is power, and they who hold all the money, hold all the power. This is way beyond any president, they are short termers who have to answer to this power. The banks, Central Banks specifically, have that power. Well, this is the New World Order, a One World Government run by bankers for bankers and bag men. They will take care of their own because their power comes from their ability to manipulate the markets and control the money. Presidents, Prime Ministers, Kings and Queens acquiesce to these money men to maintain their own power.
Now we are seeing a formation of Central Banks working in concert to control the world market, hence a True World Bank in effect. Not to be confused with the current World Bank and IMF, which were founded to reduce world poverty and make conservative loans to rebuilding countries after the Second World War. That to has changed recently. The current world bank is run by Robert Zoelick, and Zoelick has been pushing hard to expand the parameters of the world bank's functions. Zoelick is formally a Director of Goldman Sachs. Of course.
Goldman has a large role in the European Debt crisis, and thus, the ability to profit handsomely. You can bet your farm and all it's land that GS made a boatload of money today.
The list of Sach's involvement in this New World Order cannot be over-amplified. Current ECB head, Ireland, Italy, Greece, and IMF heads all have strong ties to Goldman. We know all too well of Obama's complete acquiessence to GS throughout our own current crises; Paulsen's role, Geitner's, Blankfein's open invitation to visit the Oval office at his leisure. Bush was no better before BO. Bernacke has given GS the Treasury to do as it pleased. The AIG and Wall Street bailout was a payoff to Sachs. TARP and Warren Buffet all part of the charade. Make no mistake, Goldman owns the White House as well as the Fed. Heavily involved in international funding, energy policy and investing. It's primary concern is itself. Goldman has a large slice of blame/credit? for China's rise to power. The recent trade agreement with Malaysia, South Korea, and Vietnam also brokered for Goldman's bidding.
The world bank also formerly run by Paul Wolfowitz, who's role in both Iraq wars cannot be understated. New World Order concept started with the original Iraq War. The World Bank, IMF, Bilderberg meetings, top corporations, a tangled web of interconnected power brokers, and of course the largest Banks all had a profit motive to deliver this New World Order.
Won't matter who is president. Obama, Romney, Gingrich, and Perry will all be in on the power ride. Perry already a former attendee of the super secret Bilderberg Meetings, where all the top Bankers formulate world policy and direction. Romney's Bain Capital in bed with Goldman. Gingrich goes where the money is, as ties to Fannie, healtch care and energy companies suggest.
Obama was the outsider who was quickly set straight once inside the walls of real power. Won't matter who wins the next election as money begets power and influence. Only a whole new transformation of power from outside Washington and New York could possibly change the direction we are headed. Republicans, democrats, independants all part of the problem, not the solution. This is way more than political affiliation. Where is Thomas Jefferson? We need a new Patriot Party, a whole new direction.
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[BRIEFING.COM] The Nasdaq Composite (-0.8%) has slipped to a fresh session low, while the S&P 500 (-0.2%) has slid into the neighborhood of its own low that was established during the first hour of action.
Top-weighted sectors (sans financials) remain in the red, and the discretionary space has widened its loss to 0.5%. Homebuilders took a hit this morning in reaction to a disappointing New Home Sales report and the iShares Dow Jones US Home Construction ETF (ITB 23.28, ... More
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