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While you were sleeping: Overnight wrap 9/2/09

While you were sleeping: BusinessWire overnight wrap

Feb. 9 – Stocks rallied on Wall Street on Friday as investors anticipated the government’s stimulus package, due today in Washington, will help revive the world’s biggest economy. Banks and tech shares led the advance.

The Dow Jones Industrial Average rose 2.7% to 8280.59 on Friday, as Bank of America soared 27% to US$6.13, JPMorgan Chase climbed 13% to US$27.63 and Citigroup gained 11% to US$3.91. Hewlett Packard rose 5% to US$36.85.

The broader Standard & Poor’s 500 Index rose 2.7% to 868.60 and the Nasdaq Composite advanced 2.9% to 1591.71.

The Senate is to vote Tuesday on a US$800 billion stimulus package after a group of moderate lawmakers from both Republicans and Democrats drafted a compromise bill which may give President Barack Obama a narrow victory on the package he promoted.

The stimulus plan is aimed at creating millions of jobs in an economy that shed 2.6 million in 2008 and added more cuts so far this year as companies reduced headcounts to cope with the drop in demand.

Labor Department figures on Friday showed the U.S. economy lost 598,000 jobs last month, the biggest decline in 34 years, while the unemployment rate reached 7.6%, a seven-year high.

Obama’s administration may offer to insure distressed assets held by banks, allow other lenders to be acquired by the state and spend as much as US$100 billion buying bad home loans, Reuters reported, citing a person with knowledge of the plan.

U.S. Treasury Secretary Timothy Geithner will announce details of plans for the remainder of the US$700 billion Troubled Asset Relief Program, or TARP, tomorrow in Washington.

Toyota Motor, which has overtaken General Motors in terms of sales, said its operating loss for the year ending March 31 will be 450 billion yen, three times the loss it had predicted just over a month ago, after sales tumbled more than a third in the U.S. in January.

Volvo, the world’s second-largest maker of trucks, surprised investors by announcing a fourth-quarter operating loss.

Meantime, executives at General Motors plan to meet with bondholders and union officials in Detroit this week to negotiate a restructuring of its debt, Bloomberg reported, citing people close to the talks. GM plans to reduce unsecured debt to about US$9.2 billion from US$27.5 billion, according to the report.

The U.S. dollar and yen declined versus the euro on optimism the stimulus package will help revive the U.S. economy, stoking investors’ appetite for risk.

The euro strengthened 1.2% to $1.2942 in New York on Friday and climbed 2.1 percent to 118.92 yen. The dollar rose 0.9% to 91.960 yen.

Crude oil fell after the jobless report stoked concern that demand for fuel will wane in the U.S. Crude for March delivery fell 2.4% to US$40.17 a barrel on the New York Mercantile Exchange.

Gold for April delivery climbed 10 cents to US$914.30 an ounce in New York. Copper has its biggest advance in three months on optimism about Obama’s stimulus package.

Copper futures for March delivery jumped 8.6% to US$1.6285 a pound on the New York Mercantile Exchange.

In the U.K., the Treasury will probe payouts to executives at banks that received government bailout funds, Chancellor of the Exchequer Alistair Darling said in a BBC interview. “The whole culture in the boardrooms of British banks needs to change,” he said.

The move echoes Obama’s efforts top cap executive pay at U.S. banks rescued with federal funds at US$500,000 a year

The Dow Jones Stoxx 600 Index rose 2.1% to 198.53. Invensys jumped 14% and Infineon Technologies rose 13% after announcing further cost and spending cuts to conserve cash.

Volvo jumped 16% even after posting its operating loss, as some analysts said it was positive that the truckmaker can still generate cash flow.

Royal Bank of Scotland jumped 9% and Deutsche Bank climbed 5.7%. Xstrata rose 6% as some investors speculated on an increase in demand for metals.

The FTSE 100 rose 1.5% to 4291.87 in London and Germany’s DAX 30 rose almost 3% to 4644.63. France’s CAC 40 advanced 1.8% to 3122.79.


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