Dow Jones Average
November 11, 2011 by staff
The Dow rallied 255 points, or 2.2%, to 12149, in Friday afternoon trade. The gain, which followed a 113-point rise Thursday, helped the blue-chip index recover nearly all of what it lost during Wednesday’s drubbing. The surge also pushed the Dow into positive territory for the week.
Walt Disney led the blue chips higher, rising 6.3%. The media company’s fiscal fourth-quarter profit jumped 30%, boosted by strength in its theme-parks and television business segments. All 30 Dow components traded in positive territory.
The Standard & Poor’s 500-stock index added 24, or 1.9%, to 1263, led higher by consumer discretionary, financial and material stocks. All 10 S&P 500 sectors rose. The technology-oriented Nasdaq Composite jumped 52, or 2%, to 2677.
Stocks took their cues from European markets, which were broadly higher. The Stoxx Europe 600 rose 2.4%, boosted by news that Italy’s Senate approved the 2012 budget bill. The move helps pave the way for Prime Minister Silvio Berlusconi to resign. The lower house of Parliament is expected to pass the budget on Saturday.
Italian bond yields eased further, continuing their retreat from euro-era highs earlier this week.
“The perception is the Italian government is serious about getting things straightened out, and that’s making investors more optimistic,” said Terry Morris, senior equity manager at National Penn Investors Trust Co. “But perception and reality can be two different things. That’s the big worry.”
Interim Greek Prime Minister Lucas Papademos also appointed a new cabinet Friday, which will be tasked with implementing the country’s latest bailout before the country’s elections.
The bond market is closed in observance of Veterans Day. Trading volume has also been light as stocks have surged, suggesting there may not be much conviction behind the rally. About 1.01 billion shares changed hands in NYSE composite volume as of 11 a.m. Eastern, which is below average this year.
“Those are two cautionary comments,” said Charlie Smith, chief investment officer at Pittsburgh-based Fort Pitt Capital Group. “I wouldn’t put a lot of credibility behind a jump of this size.”
Stocks got a boost after consumer-sentiment levels moved higher this month. The preliminary Thomson Reuters/University of Michigan consumer sentiment index for November hit 64.2, from 60.9 in October. The reading exceeded economists’ expectations.
The better-than-expected report on consumer sentiment underscored the continued improvement U.S. economic data have shown over the last few weeks. Jobless claims on Thursday fell to their lowest level in seven months, suggesting progress for the labor market.
“I’m not seeing hard evidence of another economic downturn,” said Jack Ablin, chief investment officer at Harris Private Bank.
Asian bourses also gained ground. Hong Kong’s Hang Seng Index rose 0.9%, and Japan’s Nikkei Stock Average gained 0.2%.
Gold futures rose above $1,788 an ounce, while crude-oil futures rose 0.9% and traded above $98.50 a barrel. The U.S. dollar slipped against the euro and the yen.
In corporate news, Citigroup rose 3% after The Wall Street Journal reported the banking company would sell EMI Music Publishing to a group spearheaded by Sony for $2.2 billion.
E*Trade Financial slid 4% after the online broker said it decided after a review of strategic alternatives that it wouldn’t put itself up for sale.
D.R. Horton swung to a fiscal fourth-quarter profit after the home builder booked fewer impairment charges and as orders and closings rose. But the results fell short of Wall Street’s consensus view, causing shares to fall 2.4%.
Nordstrom offered a full-year earnings outlook that fell belowanlyst forecasts, prompting the stock to drop 1.2%.
Viacom said it is voluntarily transferring its stock exchange listing to the Nasdaq Global Market, from the New York Stock Exchange. The stock gained 5.3%.
Caterpillar plans to shift production of small track-type tractors and mini hydraulic excavators to a new North American facility from Japan. Once it is fully operational, the North American facility will employ more than 1,000 people. Shares rose 3.7%.
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