Activity on the mergers and acquisitions front and robust Chinese factory data buoyed confidence that the recovery is beginning to gain momentum, sending stocks higher for a fourth successive session. Financials got a boost after global regulators agreed to implement measures that will make it mandatory for financial institutions to shore up their capital reserves and prevent another meltdown. The advance sent the Dow industrials into positive territory for the year.
The Dow Jones Industrial Average advanced 82 points, or 0.8%, to 10544.13. The tech-heavy Nasdaq Composite index soared more than 43 points, or 1.9%, and broader S&P 500 index jumped 12 points, or 1.1%, to 1,121.90. On the New York Stock Exchange, three stocks rose in price for every one that advanced as volume picked up slightly from Monday's anemic lows.
The agreement on capital requirement, to be effected over an eight year period, sent shares in financial companies higher. Goldman Sachs GS climbed 2.7% to $154.37 and JPMorgan Chase JPM jumped 3.7% to $41.24. US Bancorp USB climbed 3.3% to $23.37 and Bank of America BAC added 3% to $13.95. Shares in Citigroup C rose 2.1% to $3.99.
The rally in Dow industrials was fueled by a 5.3% jump in Microsoft MSFT shares on reports the firm is planning to sell debt to fund dividends and stock buybacks, as well as news on today's release of the latest version of the "Halo:Reach" videogame and introduction of wireless Internet networks on unused television airwaves
Nevertheless, the day belonged to the banking sector. Keefe, Bruyette and Woods upgraded European banking shares to "overweight" from "neutral." Sanford Bernstein lifted their rating for regional banks to "outperform" from "market perform," sending shares of Zions Bancorp ZION up 7.4%, Marshall and Ilsley MI up 4.5%, and Huntington Bancshares HBAN up 3.9%.
Intel INTC shares increased 3.3% after the firm announced next year's availability of its "Sandy Bridge" core processors with capability for processing and graphics on a single chip. A Gartner that said semiconductor equipment spending is likely to double in 2010 sent shares in Micron Tech MU up 8.3%.
This morning's stock futures suggest a mixed opening after a Commerce Department report said retail sales rose more than expected in August. Ahead of the bell the Dow Jones industrial average futures are up 3 points, or about 0.1%, at 10,445. The S&P 500 futures are nearly 1 point at 1,116, while Nasdaq 100 futures are up slightly.
This morning Cisco CSCO CEO John Chambers' statement on the economy will be in focus as the company holds its analyst meeting. At the fourth quarter earnings call Chambers' reference to "unusual uncertainty" in the economy had concerned quite a few about the near-term outlook for the economy. On the earnings front, premarket reports are also scheduled for electronics retailer Best Buy BBY and retailer Kroger KR.
BANK OF AMER CP (BAC): Free Stock Analysis Report
BEST BUY (BBY): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
CISCO SYSTEMS (CSCO): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
HUNTINGTON BANC (HBAN): Free Stock Analysis Report
INTEL CORP (INTC): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
KROGER CO (KR): Free Stock Analysis Report
MARSHALL&ILSLEY (MI): Free Stock Analysis Report
MICROSOFT CORP (MSFT): Free Stock Analysis Report
MICRON TECH (MU): Free Stock Analysis Report
US BANCORP (USB): Free Stock Analysis Report
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