3-Day Rally in U.S. Stocks; Gold Gains

Mayank Mehta, Arthi Gupta and Darlington Musarurwa
12 May, 2010
New York City

U.S. indexes accelerated gains in the late afternoon on rising optimism. Better than expected earnings at companies in U.S. and Europe and deal talks to acquire Fidelity National also supported the sentiment. Niska Gas Storage Partners LLC completed initial public offering to raise $359 million.

[R]4:15 PM New York – U.S. indexes accelerated gains in the late afternoon on rising optimism. Better than expected earnings at companies in U.S. and Europe and deal talks to acquire Fidelity National also supported the sentiment. Niska Gas Storage Partners LLC completed initial public offering to raise $359 million.[/R]

U.S. stocks accelerated their gains after Portugal completed the sale of one billion euros of bonds and Spain proposed austerity measures to cut spending and positive earnings from AP Moeller-Maersk, ING, Allianz and Aegon reported better than expected earnings.

XL Capital Ltd led gainers in the S&P 500 index with a rise of 8.4%. Fidelity National shares rise on deal talk. Walt Disney quarterly net surges 55%. Electronic Arts Inc swings to a profit in fiscal fourth quarter. Ambac drops after it delays its quarterly regulatory filings.

European indexes gained on positive earnings from Deutsche Telekom, Allianz, ING, Natixis and Aegon. Euro-area GDP increased 0.2% in the quarter to March industrial output gained 1.3% in the month. Spain announced austerity measures to trim government spending.

Portugal completed the sale of one billion euros of 10-year bonds that expire in 2020 at a yield of 4.52%.

U.K. stocks rise after Prime Minister David Cameron pledged to cut budget deficit as soon as possible. Unemployment rate in the first quarter to March was 8.0% and GDP increased by 0.2%. Towers Watson & Co. profit drops after merger.

Stocks in Japan struggled as the yen gained and banks declined. Latest read of economic data suggested an improvement in economic conditions. Foreign reserves assets rise above $1 trillion. Toyota estimated latest years net to rise 48% and Olympus dropped after it estimated net to decline 56%.

Indexes in Hong Kong and Shanghai closed higher but consumer stocks fell on the worries of rising interest rates. China Railway Construction wins nearly $500 million contract. Zijin Mining agrees to buy 60% stake in Congo Mining Company.

Stocks in Mumbai traded higher after industrial production increased in March. The rise in production of more than 10% for the sixth month in a row prompted worries of higher inflation. Rupee gained. Bajaj Auto fourth quarter net triples in the fourth quarter.

The Australian dollar and stocks fell after the government proposed to return to a budget surplus in three years. Mortgage lending shrinks 1.4% in March. Transurban rejected A$7.2 billion offer. Commonwealth Bank fiscal first quarter earnings increase 30%.

North American Markets

Dow Jones Industrial Average added 148.65 or 1.4% to close at 10,896.91, S&P 500 Index increased 15.88 or 1.4% to 1,171.67 and Nasdaq Composite Index added 49.71 or 2.1% to close at 2,425.02. Toronto TSX Composite Index added 193.78 or 1.6% to 12,194.39.

Latin American Markets Indexes

Mexico IPC Index increased 242.78 or 0.8% to 32,361.89 and Brazil Bovespa Stock Index added 780.25 or 1.2% to 65,205.14.

Europe Markets Review

In London FTSE 100 Index closed higher 29.69 or 0.56% to 5,363.90, in Paris CAC 40 Index increased 35.49 or 0.96% to close at 3,728.69, in Frankfurt DAX index higher 120.86 or 2.00% to close at 6,158.57. In Zurich trading SMI increased 68.64 or 1.05% to close at 6,577.64.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 17.07 or 0.16% to 10,394.03, Hang Seng index in Hong Kong increased 65.98 or 0.33% to 20,212.49 and CSI 300 index in China higher 17.34 or 0.62% to 2,818.16. ASX 200 index in Australia increased 25.00 or 0.55% to 4,573.00. The FTSE Bursa KL Composite index in Malaysia closed higher 3.38 or 0.25% to 1,344.10.

The Kospi Index in South Korea decreased 7.21 or 0.43% to close at 1,663.03. SET index in Thailand closed higher 1.63 or 0.21% to 773.72 and JSE Index in Indonesia increased 34.73 or 1.23% to 2,847.62. The Sensex index in India increased 54.28 or 0.32% to 17,195.81.

Commodities, Metals, and Currencies

Crude oil decreased $1.06 to $75.31 a barrel for a front month contract, natural gas edged up 15 cents to $4.28 per mBtu and gasoline increased 1.20 cents to 220.72 cents.

Soybean future closed down 0.50 cent to $9.65 a bushel. Wheat futures decreased 1.75 cents in Chicago trading to $4.91 a bushel. Sugar closed up 0.76 cents at 14.76 cents a pound.

Gold increased $23.30 in New York trading to close at $1,243.60 an ounce, silver closed up $0.32 to $19.62 per ounce and copper for the front month delivery decreased 2.40 cent to $3.18 per pound.

Dollar edged higher against euro to $1.262 and gained against the Japanese yen to 93.18.

Yield on 10-year U.S. bonds increased to 3.57% and with 30-year maturities increased to 4.47%.