03-12-2009, 12:55 PM
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Join Date: Nov 2004
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Stocks Rally for a Third Day
Stocks pushed higher on Thursday, trying to rally for a third consecutive day, despite reports of a cut in General Electric’s credit rating and an increase in jobless claims.
Quote:
The Labor Department said first-time claims for unemployment benefits rose to 654,000 from the previous week’s figure of 645,000, more than analysts’ expectations. The data showed the economy remained troubled, but analysts said they believed that investors had largely factored in bleak numbers.
The Commerce Department said retail sales fell by 0.1 percent in February — less than the 0.5 percent drop economists predicted.
In addition, the ratings agency Standard & Poor’s said it was cutting G.E.’s top credit rating because of problems at the conglomerate’s lending arm.
S.&P. lowered G.E.’s rating to AA+ from AAA, a one-notch reduction. The long-expected move means it will be more expensive for G.E. to raise money in the credit markets.
At about 1 p.m., the Dow Jones industrial average was 131 points higher. The Standard & Poor’s 500-stock index was 2.1 percent higher and the Nasdaq was 1.8 percent higher. Oil prices rose $1.47 a barrel, to $43.80.
Markets in other countries stalled Thursday, with Japan’s Nikkei 225 index off more than 2 percent, as investors began to doubt a rally could be sustained.
Most Asian markets ended in the red, led by automakers and financial firms, in lackluster trade that defied slim gains on Wall Street overnight. Major European exchanges were all lower, but were trying to rally in afternoon trading.
Stocks worldwide rallied on Wednesday as indications that the struggling bank giant Citigroup might be starting to turn around lifted optimism about the hard-hit financial system, whose recovery is seen as essential to ending the global slump.
But there was little to entice investors Thursday after figures this week showed a continued sharp drop-off in Chinese exports and Japanese industrial spending — the latest evidence that Asia’s economies were being badly hurt by an economic crisis that has leveled overseas consumer demand for exports.
On Thursday, revised figures showed that Japan’s economy, the world’s second-largest after the United States, suffered its biggest contraction in 35 years in the fourth quarter. Gross domestic product shrank at a 12.1 percent annual rate in the October-December period, less than the Cabinet Office’s preliminary reading of a 12.7 percent contraction, but still confirming a serious recession.
The gloom extended to corporations, with Toyota saying it was worried its suppliers might face a cash squeeze.
“The markets are still lacking momentum; we had a one-day spike in volumes and it’s back to quiet markets today. There’s still a lot of indecision and skepticism,” said John Mar, co-head of sales trading at Daiwa Securities SMBC in Hong Kong.
“There was a slew of economic data that point to a slowdown in China,” he said. “Two large U.S. banks talked up profits, but nothing has changed fundamentally and there’s little to get you pumped back into the markets.”
Earlier in Asia, Japan’s Nikkei 225 stock average fell 177.87 points, 2.4 percent, to 7,198.25 while Hong Kong’s Hang Seng recovered early losses to gain 70.87 points, or 0.6 percent, to 12,001.53.
South Korea’s Kospi inched marginally higher, but markets in Singapore, Australia, mainland China, Taiwan and elsewhere traded lower.
In Tokyo, stocks came under pressure from a combination of a rampaging yen and Wall Street’s failure to convincingly build on Tuesday’s rally. A strong yen hurts Japanese exporters like the Toyota Motor Corporation and the Sony Corporation by cutting their dollar income from abroad.
“Sentiment in Tokyo turned downbeat as investors were disappointed by marginal gains in the U.S. market yesterday. With feeble gains overnight, investors were worried U.S. shares could fall again Thursday,” said Yutaka Miura, senior strategist at Shinko Securities.
Toyota, the world’s largest automaker, fell 3.1 percent and Honda Motor dropped 6.6 percent. Mitsubishi UFJ Finance, a major lender, was off 3.7 percent.
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From NYTimes: Stocks Rally for a Third Day
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