While you were sleeping: Stocks climb on optimism
May 13 (BusinessDesk) – Equities climbed on both sides of the Atlantic, pushing the Dow Jones Industrial Average to an intraday record, amid optimism that central banks in the world’s largest economies will help accelerate the pace of growth.
With about an hour of trading left in the day in New York, the Dow added 0.62 percent, the Standard & Poor’s 500 Index climbed 0.85 percent, while the Nasdaq Composite Index rose 1.53 percent.
Gains in shares of Goldman Sachs and United Technologies, up 1.7 percent and 1.4 percent respectively, propelled the Dow higher.
Shares of Pinnacle Foods jumped, last up more than 13 percent after Hillshire Brands agreed to buy the company for about US$6.6 billion including debt.
"These brands are almost siblings to one another. Meats go with vegetables, sandwiches go with pickles," Hillshire Chief Executive Sean Connolly, who will lead the post-merger company, told Reuters in an interview.
The Dow climbed as high as 16,702.40, an intraday record. The S&P 500 is near a record with eight of its 10 industry sectors higher. Internet and biotech stocks, which have been hammered in volatile trading recently, were among the biggest gainers including Facebook, Netflix and Twitter.
Meanwhile US Treasuries fell, pushing yields on the 30-year bond four basis points higher to 3.50 percent.
“The global economy is accelerating, central banks are dovish, companies are making acquisitions and it’s hard to see what could keep the market down from here,” Allan von Mehren, chief analyst at Danske Bank in Copenhagen, told Bloomberg News.
Europe’s Stoxx 600 Index ended the day with a 0.7 percent increase from the previous close. France’s CAC 40 advanced 0.4 percent, the UK’s FTSE 100 rose 0.6 percent, while Germany’s DAX gained 1.3 percent.
Following reassuring comments by both US Federal Reserve Chairman Janet Yellen and European Central Bank President Mario Draghi last week that they are ready to help support the pace of growth, some interpreted Chinese President Xi Jinping’s latest comments that the government will underpin equities in the world’s second-largest economy.
“We must boost our confidence, adapt to the new normal condition based on the characteristics of China's economic growth in the current phase and stay cool-minded,” Jinping said on the weekend, according to Xinhua News Agency.
He said the government needed to prevent risks and take “timely counter-measures to reduce potential negative effects.”
Metals including nickel and copper rose as a result, rising more than 5 percent and 2 percent respectively.
"Investors clearly seem to be hoping that the Chinese government will be more aggressive in responding to the weakness that is now more evident in broad swaths of the economy," Ed Meir, analyst at INTL FCStone, told Reuters.