Stock Market News for May 28, 2010 - Market News

After a number of whipsaw sessions, U.S. stocks advanced sharply on Thursday, led by a rally in energy, technology and financial shares, as China refuted reports that it was considering trimming down its investments in European government bonds.  The Chinese assurance was seen as a vote of confidence in Europe’s ability to stave off a financial crisis in the region.

Investors tried to look beyond Europe and set their eyes on good news, even as uncertainty surrounding the financial markets showed no signs of easing.  Beijing’s assurances heartened investors and helped reverse the downward trend that has lately been the norm.  In one of its biggest advances this year, the broader Standard & Poor’s 500 index rocketed nearly 3.3%.  The Dow Jones industrial average jumped 285 points, ending the day at 10,258.99.  The tech-heavy Nasdaq, lifted by a rally in its technology components, closed up about 82 points or 3.73%.

As risk-taking sentiment improved, the Vix “fear factor" plunged 15.3% to 29.68.  Crude prices jumped 4.2% to $74.53.  A day after reaching near its four-year low hit last week, the euro jumped to $1.2358.  The dollar dropped against a basket of currencies for the first time in four days.  Treasury prices tumbled, pushing interest rates higher.  The yield on the benchmark 10-year note jumped to 3.36% from 3.19% late Wednesday.

Ahead of the long weekend, U.S. stock futures suggest a quite day on Wall Street today.  After yesterday’s sharp rally, stock futures are modestly higher this morning.  

Yesterday’s some disappointing reports on the U.S. economy notwithstanding, China’s State Administration of Foreign Exchange chief Yi Gang’s assertion that “China has always firmly supported the EU integration process," helped turn sentiments positive.  “We support the European Union and the International Monetary Fund package of financial stability measures being taken," the agency chief noted.  Spain, meanwhile, announced an additional $18.29 billion cuts as part of the austerity measures.

Improved risk-taking sentiments sent all ten S&P500 industry sectors higher, with natural resource plays leading on the upside on improved prospects for global growth, especially in China.  Financials followed with a 4.3% gain as hopes grew Goldman Sachs GS and the SEC would reach an amicable settlement.  The jump in crude prices and an analyst upgrade of BP BP sent oil and gas shares higher.  However, reports said BP’s oil spill is the US' worst-ever.  Technology shares rallied 3.7%, largely helped by an FBR upgrade of Microsoft's MSFT to "outperform." FBR cited strong corporate demand for Microsoft’s products and its undervalued shares, sending shares in the software maker up 4%.  Apple AAPL, meanwhile, took over Microsoft as the largest technology company by market cap.

Today marks the global launch of Apple’s AAPL iPad after a month-long delay caused by strong demand in the United States.  Even as demand for gadgets remains strong, the problems in the eurozone keep weighing on corporate sentiments.  Guess GES shares fell 7.3% in extended trade after the company slashed its second-quarter outlook well below Street estimates, noting "the euro has now weakened significantly below our planning assumptions.  If this trend persists, this would impact both our earnings translation and our margins negatively."