While you were sleeping: Stocks gain as US services sector grows

Tuesday 6th October 2009

Stocks gained on Wall Street after the US services sector, which makes up nearly 90% of the economy, grew for the first time in 12 months, and Goldman Sachs Group recommended large banks.

The Dow Jones Industrial Average climbed 1.3% to 96089.72 and the Standard & Poor’s 500 gained 1.5% to 1040.57. The Nasdaq Composite rose 1.1% to 2070.02.

Wells Fargo climbed 7.2% to US$28.17 after Goldman raised the lender to ‘buy’ from ‘neutral.’ JPMorgan Chase gained 4.5% to US$43.75.

Bank of America rose 3.4% to US$16.89 after the Wall Street Journal reported the lender may be preparing to appoint a chief executive at short notice should CEO Kenneth Lewis step down before the end of the year.

Alcoa Inc., the aluminium producer, rose 4.8% to US$13.43, leading the Dow higher, as the prices of raw materials rallied. Alcoa is the first company on the Dow to post third-quarter earnings, on October 7. The Reuters/Jefferies CRB Index of 19 commodities gained 1.3% to 256.17.

Brocade Communications Systems surged 19% to US$9.13 after Bloomberg reported the data-storage switch maker may seek a suitor, and Hewlett-Packard and Oracle Corp. may be interested.

The Institute for Supply Management’s index of non-manufacturing businesses rose to 50.9 last month on a scale where a reading above 50 signals expansion, from 48.4 in August.

The US dollar weakened against the euro as stocks advanced and data showed the American services industry has resumed growth, encouraging investors to seek riskier, or higher-yielding assets in other currencies.

The dollar fell to US$1.4663 per euro from US$1.4576. The yen weakened to 131.22 per euro, from 130.90 and strengthened to 89.50 per dollar from 89.81.

The Dollar Index, which measures the dollar against a basket of six major currencies, fell 0.5% to 76.63.

Gold gained as the greenback weakened, stoking demand for the precious metal as an alternative investment.

Gold futures for December delivery rose 1.3% to US$1,017.80 an ounce on the New York Mercantile Exchange.

Crude oil for November delivery climbed 0.7% to US$70.43 after the services sector data stoked optimism demand for fuel will increase.

Stocks rose in Europe, with the Dow Jones Stoxx 600 gaining 0.9% to 236.09. Among regional benchmarks, the UK’s FTSE 100 gained 0.7% to 5024.33, Germany’s DAX 30 advanced 0.8% to 5508.85 and France’s CAC 40 rose 0.7% to 3675.01.

Markit's Eurozone Services Purchasing Managers' Index of 2,000 companies showed the region’s services economy returned to growth for the first time in 16 months in September though job losses rose.

Deutsche Bank climbed 1.7% and Commerzbank rose about 2%. Royal Bank of Scotland climbed 4%.

BHP Billiton rose 2% and Xstrata rose 2.5% after RBS upgraded its outlook for metals prices.

Businesswire.co.nz

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