Kitsap Business and Economy

Dow now at 9,828, up 49 points.

NEW YORK (AP) — A rebound in commodities is drawing investors back into the stock market.
Major stock indicators rose at least 0.5 percent in early afternoon trading Tuesday, including the Dow Jones industrials, which gained 61 points, recovering all of the prior day’s losses.
In a reversal of Monday’s pattern, the dollar weakened against other major currencies and commodities like oil and gold bounded higher, lifting energy and material stocks.
The gains in stocks and commodities came as the Federal Reserve began a two-day meeting on interest rates. Investors are hoping the Fed will provide a clearer indication of when it may raise interest rates when it issues a statement at the conclusion of a two-day meeting on Wednesday. The Fed is widely expected to keep rates at their record low of near zero for the time being. Rock-bottom interest rates have helped fuel the market’s nearly seven-month old rally, making cash plentiful and cheap and encouraging investors to buy up riskier assets.
The market appears to be following a well-established pattern where brief selloffs are met with more buying as investors fear missing out on a continued rally.
“Reluctantly, investors are continually being dragged into a market that is finding a path of least resistance to the upside,” said Art Hogan, chief market analyst at Jefferies & Co.
The consensus on Wall Street is that the economy is healing despite ongoing challenges like unemployment. But investors still have doubts over how strong the recovery will be, and whether the stock market’s more than 50 percent move off of 12-year lows in March accurately reflects such a strong recovery.
“Right now, it’s a more orderly market,” said Greg Reynholds, senior vice president of asset management at Lenox Advisors. “People are digesting the data, trying to figure out exactly where we’re headed.”
The Dow Jones industrial average rose 61.14, or 0.6 percent, to 9,840.00. The Standard & Poor’s 500 index gained 8.71, or 0.8 percent, to 1,073.37, while the Nasdaq composite index rose 11.31, or 0.5 percent, to 2,149.35.
About three stocks rose for every one that fell on the New York Stock Exchange, where volume came to 600.7 million shares, compared with 596.9 million shares traded at the same time the day before.
In other trading, the Russell 2000 index of smaller companies rose 5.25, or 0.9 percent, to 621.22.
Gold and silver prices rose after three days of declines, while oil prices gained $1.69 to $71.40 a barrel on the New York Mercantile Exchange.
Commodities rose as the U.S. dollar index, which measures the greenback against a basket of foreign currencies, fell 0.9 percent, after earlier hitting a fresh low for the year. The dollar has fallen sharply since early March amid record-low interest rates and unprecedented government spending designed to stimulate the economy.
Energy and material stocks were lifted by the gains in commodities. U.S. Steel Corp. rose $1.81, or 3.8 percent, to $49.83, while Chesapeake Energy Corp. rose $1.33, or 4.7 percent, to $29.44.
Financial stocks were mostly higher after Rochdale Securities analyst Richard Bove raised his target price on Bank of America Corp. to $25 a share. Shares of the Charlotte, N.C.-based bank jumped 39 cents, or 2.3 percent, to $17.64.
Citigroup Inc. shares added 23 cents, or 5.1 percent, to $4.66 after a Singapore sovereign wealth fund cut its stake in the New York bank to below 5 percent from 9 percent following a recent exchange of preferred stock.
Among technology stocks, Google Inc. shares hit a 13-month high after a Canaccord Adams analyst raised the target price on the stock to $560. Shares rose as high as $501.19 in early trading, and recently added $4.11 to $501.11.
In economic news Tuesday, a government index showed U.S. home prices rose slightly in July from the previous month, further evidence the housing market is stabilizing.
The Federal Housing Finance Agency said prices rose 0.3 percent in July from the prior month. The index is still 4.2 percent below last year’s levels and 10.5 percent off its peak from April 2007.
Stocks sold off on Monday as the dollar rose ahead of the Fed meeting, sending shares of commodity companies lower. The Dow Jones industrials lost a modest 41 points after being down as much as 94 points earlier in the day.
After soaring 49 percent since hitting a 12-year low in early March, the Dow stands less than 200 points away from the 10,000 mark — a level the average first crossed in March 1999 and hasn’t been above since October of last year.
Bond prices were little changed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, held steady at 3.49 percent.
Overseas, Britain’s FTSE 100 rose 0.2 percent, Germany’s DAX index jumped 0.7 percent, and France’s CAC-40 rose 0.3 percent. Hong Kong’s Hang Seng index added 1.1 percent. Japan’s markets were closed for a public holiday.

This entry was posted on Tuesday, September 22nd, 2009 at 11:38 am by Rachel Pritchett and is filed under Uncatagorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.