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U.S. stocks enter September with big rally

09-02-2010 08:53 BJT

NEW YORK, Sept. 1 (Xinhua) -- Leaving the worst August in ten years behind, the U.S. stocks started September with a strong rally on Wednesday as market confidence in global recovery was restored.

Mounting concerns about the health of the economic recovery pressured all three major indexes sharply lower last month, posting first down August in five years and the worst August since 2001.

But a series of upbeat economic data from both the United States and overseas markets boosted sentiment. The Dow Jones industrial average jumped more than 250 points, while the Standard & Poor's 500 index and the Nasdaq composite index rallied nearly three percent, all refreshing the largest daily gain since early July.

The Dow rallied 254.75 points, or 2.54 percent, to 10,269.47. The S&P 500 gained 30.96 points, or 2.95 percent, to 1,080.29 and the Nasdaq surged 62.81 points, or 2.97 percent, to 2,176.84.

Stocks were set for a higher opening after data from China and Australia sent overseas equity markets rising.

China's Federation of Logistics and Purchasing said on Wednesday that purchasing managers indexes climbed after three straight months of drops, showing the country's manufacturing sector was still expanding. Meanwhile, government data showed that the Australian economy grew in the second quarter at its fastest pace in three years, exceeding economists' expectation.

Major indexes surged further after the Institute of Supply Management's manufacturing figures showed an unexpected rise in U. S. manufacturing activity in August. The index rose to 56.3 compared with expectations of a drop to 52.8.

Investors largely shrugged off disappointing reports from labor and housing market. According to ADP employment report, U.S. private-sector employment surprisingly fell 10,000 in August, breaking a six-month run of increases.

Meanwhile, the U.S. Commerce Department reported that construction spending in July fell by one percent, twice as much as forecast, to the lowest level in ten years.

However, market staged a broad-based rally. All 30 Dow components closed higher, with Bank of America gaining over 6 percent.

Optimism lifted commodities and pressured on safe havens like the dollar.

A drop in gasoline and distillate fuels further affirmed crude futures' gains. Light, sweet crude for October delivery gained 1. 99 dollars, or 2.7 percent, to settle at 73.91 dollars a barrel on the New York Mercantile Exchange. Front month Brent crude rallied 1.71 dollars to settle at 76.35 dollars a barrel in London.

The dollar slid against major currencies on Wednesday as the market's risk appetite picked up. The euro rose to 1.2798 dollars from 1.2665 late Tuesday, and the British pound rallied to 1.5446 dollars from 1.5335.

In other trading, the dollar rose to 84.46 Japanese yen from 84. 07, edged lower to 1.0160 Swiss francs from 1.0164, and retreated to 1.0525 Canadian dollars from 1.0672 late Tuesday.

Editor:Xiong Qu |Source: Xinhua

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