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While you were sleeping: BusinessWire overnight wrap

Friday 18th July 2008

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Optimism about another drop in the price of oil combined with better-than-expected earnings results led Wall Street higher, with bank stocks benefiting from JPMorgan Chase & Co's stock and bond underwriting sales.

Crude oil fell for a third day, dropping below $US130 a barrel for the first time in more than a month, helping to ease investors' concerns about the outlook for inflation.

The Dow Jones industrial average surged 207.38 points, or 1.85%, to 11,446.66, while the Standard & Poor's 500 Index rose 14.96 points, or 1.20%, to 1,260.32. The Nasdaq Composite Index climbed 27.45 points, or 1.20%, to 2,312.30.

Shares of JP Morgan jumped 13.5% after the third-largest US bank's profit fell less than expected. Bank of America Corp rose nearly 17% and Citigroup gained over 9%.

In general, the first batch of corporate earnings has positively surprised analysts, who currently expect S&P 500 company earnings to decline by 16.1%, according to Thomson Reuters proprietary research released on Thursday. Financial companies' earnings are seen falling 76%.

After the markets closed in the US, a rash of results were reported. IBM's profit exceeded expectations, helping by a rise in computer sales in emerging markets.

In contrast, Google's profit failed to meet expectations, AMD posted its seventh consecutive quarterly loss and Merrill Lynch posted a larger than expected loss.

Microsoft's profit was in line with expectations though its outlook trailed analysts' forecasts.

Bonds, Currency

The stock advance reverberated through the currency and bonds markets.

The yen fell 1.2% to 106.42 per dollar at 4:25pm in New York, from 105.13 yesterday, when it touched 103.77, the strongest since May 27. It dropped 1.4% to 168.71 per euro, from 166.39 yesterday. The dollar dropped 0.2% to $1.5861 versus the euro, from $1.5827. It touched an all-time low of $1.6038 two days ago.

The two-year US Treasury note's yield advanced nine basis points, or 0.09 of a percentage point, to 2.51% at 4:25pm in New York, according to BGCantor Market Data. The price of the 2.875% security maturing in June 2010 fell 5/32, or $1.56 per $1,000 face amount, to 100 22/32.

Ten-year note yields rose six basis points to 4%, the highest since July 1.

US housing pick-up

Copper gained the most in two weeks after a report showed US housing starts unexpectedly surged in June, easing concern that demand may fall for pipes and wires.

Housing starts rose 9.1% to a 1.066 million-unit annual pace from a revised rate of 977,000 in May, the Commerce Department said today in Washington. Builders are the biggest users of copper in the US.

Copper futures for September delivery gained 6.45 cents, or 1.8%, to $3.715 a pound on the Comex division of the New York Mercantile Exchange. That marks the biggest gain on a most active contract since July 2.

In Europe, stocks staged a sharp rally with an index of the region's top 300 companies rising as much as 3.47%. The FTSEurofirst 300 index closed 2.7% higher at 1,145.87 points, after brushing an intra-day high of 1,154.72. The day's advance was the largest since April 1.

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