YAHOO [BRIEFING.COM]: Stocks
are now sporting a modest year-to-date gain after a strong session in which
strength in foreign markets, better-than-expected economic data, and leadership
from bank shares helped the S&P 500 ascend to its best level since January.
Monday's gains were
broad-based amid relatively high trading volume, which had showed signs of
tapering off late last week. More than 1.7 billion shares traded hands on the
NYSE this session.
Buyers took early cues from
overseas markets, where Asian stocks marched higher following word that several
Asian finance ministers ordered an emergency liquidity fund of $120 billion to
be pooled. News that China's second quarter GDP is expected to outpace that of
the first quarter, and a better-than-expected April PMI report, provided
additional support.
European bourses fed off the
good news, shrugging off news that the European Commission expects the European
Union economy to shrink 4% this year, which is down from the 1.8% contraction
that it had previously forecast, according to The Wall Street Journal.
Germany's DAX gained 2.8% and France's CAC advanced 2.5%. Britain's FTSE was
closed for holiday observance.
The upbeat tone abroad helped
support a positive sentiment heading into the U.S. open. Optimism was further
bolstered by news that pending home sales for March advanced by a
better-than-expected 3.2% month-over-month. Though the news feeds into the
housing recovery argument, it threatens to stall a housing recovery since
interest rates could respond by moving higher.
Construction spending in March
increased 0.3% month-over-month, exceeding the 1.6% decrease that was expected.
In turn, the March report will likely be an incremental positive when
contemplating first quarter GDP revisions.
The better-than-expected data
helped propel the major indices markedly higher in a broad-based advance, but
financials garnered the most interest. Led by diversified bank stocks (+20.5%),
the financial sector gained 10.1%.
Despite what seemed to be a
vote of confidence in banks, participants expect that several banks may need
additional capital to satisfy the government's bank stress tests, which are
scheduled to be released on May 7. In fact, an AP report said that
regulators told Wells Fargo (WFC 24.25, +4.64) to shore up its balance sheet since the
bank would have trouble surviving a deeper recession. Earlier in the
morning, billionaire investor Warren Buffett indicated in a CNBC interview that
Wells Fargo and US Bancorp (USB 20.34, +2.38) would be fine if macro conditions
deteriorated further. US Bancorp was actually put on watch negative by Standard
& Poor's, according to Dow Jones.
Participants' determination to
bid financial stocks higher supported buying in the broader market. All
10 major sectors in the S&P 500 finished with gains of at least 1.5%,
helping the S&P 500 cross the 900 level for the first time in months.
The positive tone in equity
markets lent itself to the commodities trade, helping the CRB Commodity Index
climb 1.5%. June crude oil contracts closed at $54.43 per barrel, up
2.3%. Gold futures shot above $900 per ounce to close 1.6% higher at
$902.00 per ounce.
Meanwhile, the U.S. dollar
slid 0.7% against a basket of major foreign currencies.DJ30 +214.33 NASDAQ
+44.36 NQ100 +2.2% R2K +4.1% SP400 +4.2% SP500 +29.72 NASDAQ Adv/Vol/Dec
2108/2.54 bln/630 NYSE Adv/Vol/Dec 2618/1.71 bln/455