US stocks get a lift from services sector gains; Japanese rate cut lifts world marketsBy AP
Tuesday, October 5, 2010
Gain in services sector lifts stocks; Dow up 180
NEW YORK — Stocks rose Tuesday following news that activity expanded in the U.S. services sector last month.
World markets also rose after the central bank of Japan surprised investors by slashing interest rates to near zero.
The Institute for Supply Management reported that the U.S. services industry grew slightly faster in September as demand from customers improved. It was the ninth straight month of expansion in services, which have been growing at a slower pace in the U.S. relative to the much smaller manufacturing sector.
In corporate news, Mexican broadcaster Grupo Televisa said it would invest $1.2 billion in Univision Communications, expanding a license deal between the Spanish-language media heavyweights. Televisa’s U.S. shares rose 9.8 percent.
The Dow Jones industrial average rose 184.33 points, or 1.7 percent, to 10,935.60 in afternoon trading. Boeing Co., DuPont and Caterpillar Inc. had the biggest gains in the Dow, and all but one of the average’s 30 components rose.
The Standard & Poor’s 500 index rose 22.68, or 2 percent, to 1,159.71. The index hadn’t traded above 1,150 since mid-May, not long after stocks reached their highest levels of the year in late April.
Robert Pavlik, chief market strategist at Banyan Partners LLC in New York, cites another factor in today’s upward swing: Even when stocks have fallen lately, the S&P 500 has managed to stay above 1,130, a key technical barrier that it had broken through on Sept. 20. He said that has given jittery investors confidence to buy.
“A lot folks who have cash on the sidelines are being drawn into the market because they don’t want to be left behind,” Pavlik says. “I think there’s potential to get to 1,200 by the end of the year.”
The Nasdaq composite index rose 54.42, or 2.3 percent, to $2,398.94.
In a surprise move, Japan’s central bank cut its key interest rate to virtually zero and is looking to buy government bonds in an effort to boost the faltering Japanese economy. Japan has been struggling with a strong currency and falling prices, and authorities there intervened in currency markets last month to weaken the yen, but the impact was short-lived.
U.S. traders have their eyes set on some key economic and corporate reports this week, including earnings reports Thursday from PepsiCo Inc. and Alcoa Inc. On Friday, the Labor Department delivers its monthly jobs survey, the most important report on the economic calendar.
Investors are also hoping for more action from the Federal Reserve to boost the U.S. economy, and got more encouragement from remarks by Fed Chairman Ben Bernanke late Monday. Bernanke said the economy could be helped by another round of asset purchases by the central bank, and hopes are building that the Fed could announce new measures at its next meeting Nov. 2 and 3.
Stocks were also trading higher in Europe. Britain’s FTSE 100 rose 1.4 percent, Germany’s DAX index rose 1.3 percent, and France’s CAC-40 rose 2.3 percent. Hong Kong’s Hang Seng index rose 0.1 percent.
About five stocks rose for every one that fell on the New York Stock Exchange, where volume came to 530 million shares.
AP Business Writer Bernard Condon contributed to this report.
Tags: Asia, East Asia, Japan, New York, North America, Service Sector Performance, United States