Investors pumped more money into equities, sending the Dow Jones industrial average to its 14-month high, as Dubai World said it is in talks to restructure about half of its debt. Also, a cheaper dollar sent commodities prices higher, helping shares of energy and material companies. Data showing Chinese manufacturing grew at the fastest pace in five years helped lift sentiments on the Street.
Markets had tumbled last week after an investment firm in Dubai, which was the main engine of the emirate’s breakneck economic growth, asked to defer payments for at least six months. Fears that the emirate’s debt problems would snowball into a major economic crisis pushed benchmark indexes from Europe to Asia sharply lower.
This morning’s stock futures are mixed after a private group's report showed job losses declined in November for the eighth straight month, but the decline was below expectations. Ahead of the opening bell, Dow Jones industrial average futures are down 3 points, or less than 0.1%, at 10,458. Standard & Poor's 500 index futures fell 0.20 points, or less than 0.1%, at 1,108.20, while Nasdaq 100 index futures are up 0.25 points, or less than 0.1%, at 1,792.25.
On Tuesday, the Dow Jones industrial average jumped 127 points, or 1.2%, to 10,471.58, its highest close since October 2, 2008. The S&P 500 index gained 13 points, or 1.2%, to 1,108.86, closing a shade below a 14-month high. The Nasdaq composite rose 31 points, or 1.5%, to 2,175.81. On the New York Stock Exchange, winners beat losers by a four-to-one margin on volume of 1.13 billion shares. The CBOE Vix, Wall Street’s fear gauge, plunged 10.6%.
Tuesday saw across-the-board strength, with all but the financial sector advancing by more than 1%. Leading the gains were basic materials, telecommunications and utilities, each up 1.7%. Banking analyst Richard Bove appeared concerned about the government’s plans to lift capital requirements for a number of banks, with such notable exceptions as Citigroup (NYSE:C), State Street (NYSE:STT), Northern Trust (NASDAQ:NTRS) and First Horizon (NYSE:FHN).
Crude prices eased to $77.98 ahead of weekly inventory data, expected to remain at prior week levels, tagging yesterday's American Petroleum Institute results. Although the dollar is holding steady this morning, gold continues to sparkle, hitting another record at $1,216.75. Year-to-date the metal has jumped 41%.
Housing shares got a boost yesterday after the National Association of Realtors said pending home sales rose in October to the strongest level since March 2006. Lennar (NYSE:LEN) shares jumped 1.7%, DR Horton (NYSE:DHI) 1.7%, and Pulte Homes (NYSE:PHM) 1.9%.
Yesterday, ICSC-Goldman Sachs said weekly US retail sales improved for the twelfth straight week. The report sent a number of retailers' shares higher, with Sears Holdings (NASDAQ:SHLD) up 2.8%, Dollar General (NASDAQ:DG) up 1.4%, and Costco (NASDAQ:COST) up 1.4%.
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