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U.S. Markets Reach Highest Point Since May 6 Flash Crash Amid Quantitative Easing Speculation
Written by article default Saturday, 09 October 2010 10:37
U.S. Session Key Developments* Dow Jones Industrial Average Closes Above 11,000
* Unemployment Rate Remains at 9.6 Percent
U.S. Markets Reach Highest Point Since May 6 Flash Crash Amid Quantitative Easing Speculation
U.S. Markets gained, sending the Dow Jones Industrial Average above 11,000 for the first time since before the May 6 flash crash as worse than estimated jobs data raised speculation the Federal Reserve will enact further stimulus. The US job report reported that the nation lost 95,000 jobs last month, a steeper than expected decline. The private sector added 64,000 jobs, which was less than economists expected and not nearly enough to offset the large amount of government census workers laid off. The jobs report reminds investors that the economic picture is still grim even 15 months after the Great Recession officially ended. The overall unemployment rate remained unchanged at 9.6% in September, better than economists’ expectations by one tenth of one percent. However, the underemployment rate, a broader overall measure that keeps track of discouraged workers and those workers that want to work more hours but cannot find employment, rose to 17.1 percent, the highest rate since April.
DJIA 30 / 11,006.48 / +57.90 / +0.53%
The DJIA gained nearly 60 points as investors felt that a weaker jobs report would ensure further quantitative easing. Alcoa Inc. rose 6.3 percent after beating profit estimates by 67 percent to kick off earnings season. The company announced that growth in Chinese demand will help boost global use of their product by 13 percent. A gauge of raw-materials producers including Alcoa rose 2.2 percent, the biggest gain in the S&P 500 within 10 industries.
S&P 500 / 1,165.15 / +7.09 / +0.61%
The S&P 500 added 0.61 percent to 1,165.15 exceeding the closing level the day before the May 6 flash crash. The benchmark index rose 1.6 percent this week but is still down 4.4 percent from this year’s April high amid unemployment and budget deficit concerns. CF Industries Holdings Inc., Deere & Co., and Monsanto Co. surged more than 6.1 percent as the U.S. government cut supply forecasts for corn, soybeans and wheat. Tyson Foods Inc. and Smithfield Foods Inc. plummeted 5.9 percent on concern feed costs will rise. J.C. Penny Co. and Fortune Brands Inc. rallied over 4 percent after Pershing Square Capital Management LP disclosed stakes.
NASDAQ / 2,401.91 / +18.24 / +0.77%
The Nasdaq Composite Index experienced the largest advance among the three major benchmark indexes. Apple Inc. gained 1.4 percent to $293.25. China Telecom Corp., the nation’s third-largest mobile phone company, may have held intensive talks with the maker of iPhones to offer the device early next year, according to analysts at Deutsche Bank. Adobe Systems Inc. plummeted 5.6 percent to $27.10, a day after surging 12 percent after there were reports about a possible merger with Microsoft Corporation. Motorola Inc. slumped 3 percent after the phone maker was cut to “hold” from “buy” at Citigroup Inc.
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