Advertisement
YOU ARE HERE: LAT HomeCollectionsOptimism

Stocks open higher amid optimism over recovery

September 09, 2009|Times Wire Services

Economic optimism prompted investors to take on more risk Tuesday, sending stock markets up worldwide and pushing the dollar down to its lowest level this year against the euro.

Commodities rallied, as did stocks of raw-material producers, after Goldman Sachs Group cited evidence of a stronger-than-anticipated recovery in global industrial activity. Gold once more rose above $1,000 an ounce before falling back.

The Dow Jones industrial average began the holiday-shortened week by rising 56.07 points, or 0.6%, to 9,497.34, for a three-day gain of 217 points, or 2.3%.

The broader Standard & Poor's 500 index jumped 8.99 points, or 0.9%, to 1,025.39, and the Nasdaq composite index climbed 18.99, or 0.9%, to 2,037.77. The Russell 2,000 index of smaller companies added 1%.

Three stocks rose for every one that fell on the New York Stock Exchange.

The MSCI World index of stocks in 23 developed economies advanced 1.2% after Credit Suisse Group said investors should favor stocks over bonds and cash. The MSCI Emerging Markets stock index surged 1.9%. Key share indexes rose 3.4% in Russia and 1.7% in China.

"The economy is growing again around the world, and that's the big thing for stocks," said Howard Ward, chief investment officer for growth equities at Gamco Investors in Rye, N.Y.

"We're looking at a global synchronized recovery right now."

Another assist for stocks was new takeover activity, including an unsolicited bid from Kraft Foods for British rival Cadbury. Shares of Cadbury soared 38%. Kraft slumped 5.9%.

Also in Europe, Deutsche Telekom and France Telecom said they planned to combine their cellphone units in Britain to form that country's biggest mobile operator.

The increased appetite for risk, especially overseas, sent the dollar lower. An index of the greenback's value versus six other major currencies slumped 1%.

The euro rose as high as $1.454, up from $1.431 on Friday and its highest level against the dollar since December, before finishing the day at $1.449, up 1.3%.

The shift toward risk weakened demand for Treasury bonds, pushing their yields up. The 10-year Treasury note rose to 3.46% from 3.44% late Friday.

In the commodity markets, oil futures surged $3.08, or 4.5%, to settle at $71.10 a barrel on the New York Mercantile Exchange, and copper jumped 3.2%. Lead climbed 4.5% in London to its highest price since May 2008. The report by Goldman Sachs predicted that the price of copper would rise 21% through the end of 2010.

Gold surged as high as $1,009.70 an ounce in New York, an 18-month intraday high, before closing at $997.90, up $3.

Shares of Freeport-McMoRan Copper & Gold rallied 3%, and aluminum producer Alcoa gained 3.5%. Oil-field service giant Schlumberger rose 4%.

General Electric jumped 4.5% after JPMorgan Chase upgraded the Dow component's shares, saying expectations for the company were too low.

Advertisement
Los Angeles Times Articles
|
|
|