NEW YORK (Reuters) - Stocks rose on Tuesday as expectations the Federal Reserve will slash interest rates for the second time in a week boosted banks, insurers and home builders.
Investors snapped up shares of JPMorgan Chase and Wells Fargo on a bet lower interest rates will boost their profits and shore up the economy. Shares of insurer American International Group gained more than 3 percent.
Home builder shares surged, with Pulte Homes up more than 7 percent, on hopes lower rates will also revive the moribund housing market.
Fresh economic data showing an unexpected jump in orders for long-lasting manufactured goods offered another reason to be hopeful about the health of the economy. Plane maker Boeing Co. led the Dow's climb.
The Fed's policy-setters are widely expected to cut interest rates again on Wednesday, a week after they slashed rates by three-quarters of a percentage point in an emergency step to ward off a recession.
"The Fed is still going to do a 50 basis points rate cut," said Michael Darda, chief economist at MKM Partners in Greenwich, Connecticut. "I don't think they're going to run the risk of disappointing what they believe are very fragile credit markets."
The Dow Jones industrial average gained 96.41 points, or 0.78 percent, to 12,480.30. The Standard & Poor's 500 Index climbed 8.33 points, or 0.62 percent, to 1,362.30. The Nasdaq Composite Index finished up 8.15 points, or 0.35 percent, at 2,358.06.
BANKS RALLY
Shares of JPMorgan, the No. 3 U.S. bank, finished up 4.1 percent at $47.45 on the New York Stock Exchange, while those of Wells Fargo, the nation's fifth-largest bank and second-largest mortgage lender, ended up 2.5 percent at $32.60.
Shares of AIG ended among the Dow's and the S&P 500's top advancers, up 3.9 percent at $56.73. Shares of Bank of America Corp, the largest U.S. bank by market value, gained 1.8 percent to $41.94.
The S&P financial index closed up 1.4 percent.
Shares of Pulte Homes, the No. 3 U.S. home builder, finished up 7.8 percent at $14.85 on the NYSE, while those of WCI Communities Inc, which builds luxury homes mostly in Florida, jumped 8 percent to $4.86.
The Dow Jones home construction index closed up 3.7 percent.
Shares of big manufacturers rose following the report on durable goods orders. Boeing led the Dow's climb with a gain of 4.3 percent to end at $80.96.
"The underpinnings of the economy got a little bit better picture today from the durable goods number... it takes a little bit of steam out of recessionary calls," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.
Shares of iPod maker Apple Inc were the top advancer on the Nasdaq, ending up 1.2 percent at $131.54.
Tech sector gains, however, were kept in check by disappointing outlooks from technology companies including EMC Corp and caution ahead of quarterly results from Yahoo Inc.
After the bell, Yahoo, the Internet media company, reported a drop in quarterly profit and forecast 2008 revenue below Wall Street expectations. Its shares dropped nearly 7 percent from a Nasdaq close of $20.81.
Trading was moderate on the New York Stock Exchange, with about 1.56 billion shares changing hands, below last year's estimated daily average of roughly 1.9 billion, while on Nasdaq about 2.24 billion shares traded, above last year's daily average of 2.17 billion.
Advancing stocks outnumbered advancing ones by a ratio of about 9 to 5 on the NYSE and by 5 to 4 on Nasdaq.
No comments:
Post a Comment