US stocks rise, following European and Japanese markets higher

Tuesday, October 5, 2010

Stock rise following Japan’s move on yen

NEW YORK — Stocks opened higher Tuesday following gains in world markets after the central bank of Japan moved to weaken the yen.

Japanese stocks jumped 1.5 percent after the Bank of Japan moved to push the yen down, a move that will help big Japanese exporters like Toyota. European markets also rose.

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.

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 6.6 percent in morning trading.

In the 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.

Later Tuesday investors will get a reading on the U.S. service sector as the Institute for Supply Management releases its September non-manufacturing survey. Investors are hoping the survey will show a similar kind of expansion that last Friday’s manufacturing report did.

In the first hour of trading, the Dow Jones industrial average rose 82.99, or 0.8 percent, to 10,834.26.

The Standard & Poor’s 500 index rose 11.18, or 1 percent, to 1,148.21, while the Nasdaq composite rose 27.36, or 1.2 percent, to 2,371.88.

Stocks had pulled back on Monday following some disappointing news on the economy. Factory orders fell slightly more than expected in August and contracts for new homes remained far below last year’s pace. Traders were also booking profits after a historic 10.4 percent runup in the Dow Jones industrial average in September.

U.S. investors hoping for more economic stimulus from the Federal Reserve got some encouraging remarks late Monday from Federal Reserve Chairman Ben Bernanke, who said the economy could be helped by another round of asset purchases by the central bank. Hopes are building that the Fed could announce new measures at its next meeting Nov. 2-3.

Stocks were also trading higher in Europe. Britain’s FTSE 100 rose 0.4 percent, Germany’s DAX index also rose 0.4 percent, and France’s CAC-40 rose 1.5 percent. Hong Kong’s Hang Seng index rose 0.1 percent.

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