Stocks rebound as uncertainty eases (Reuters)

November 11, 2010
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NEW YORK (Reuters) – Stocks advanced on Wednesday as investors put the previous day’s uncertainty aside and snapped up some of the week’s biggest losers in renewed optimism the rally remains intact.

Banks, which lost 3 percent over the past two sessions, rebounded. The S&P 500 Financials index (.GSPF) gained 1.4 percent and was the best performer of the S&P 500′s top 10 sectors.

The S&P energy index (.GSPE), ended up 1.3 percent. The stock of Chevron (CVX.N), the second-largest U.S. oil and gas company, rose 1.9 percent to $85.17 as oil rose to a new two-year high above $88 a barrel.

The market still has an upside momentum, especially after falling about 1 percent in the previous two sessions, said Randy Frederick, director of trading and derivatives at the Schwab Center for Financial Research in Austin, Texas.

The stock market was hit by worries in a number of areas on Tuesday, including rising interest rates, which hurt banks, and falling gold and silver prices.

“If you look at the VIX futures, there isn’t much negativity out there. VIX futures that expire in November are pretty much in line with now,” Frederick said.

The CBOE Volatility index (.VIX) , Wall Street’s so-called fear gauge, fell 3.2 percent to 18.47. The VIX usually moves inversely with the S&P 500, tracking options prices that investors are willing to pay as protection on movement of the underlying stocks.

Stocks declined earlier in the day as Ireland’s borrowing costs hit another euro lifetime high, partly due to political uncertainty over its austerity plans.

Worries about the European debt helped push the U.S. dollar higher, which also kept buying interest in stocks subdued.

The Dow Jones industrial average (.DJI) rose 10.29 points, or 0.09 percent, to end at 11,357.04. The Standard & Poor’s 500 Index (.SPX) gained 5.31 points, or 0.44 percent, to 1,218.71. The Nasdaq Composite Index (.IXIC) advanced 15.80 points, or 0.62 percent, to close at 2,578.78.

Since September began, the S&P 500 has climbed 16 percent in a rally mostly triggered by expectations — confirmed last week — that the Federal Reserve would buy more assets.

CISCO TUMBLES LATE AFTER RESULTS

After the bell, Cisco Systems Inc (CSCO.O) reported a 19 percent jump in quarterly revenue as a revived economy encouraged more spending on networks to route Internet traffic.

But Cisco’s stock lost about 14 percent to $21.15 in extended trade following results after CEO John Chambers said he was disappointed in the company’s own revenue guidance for fiscal 2011.

As for Cisco’s quarterly results, some investors had hoped for stronger proof of a recovery in the technology sector.

Microsoft’s (MSFT.O) stock also fell 1.6 percent to $26.50 in after-hours trading following Cisco’s guidance.

The drop in Cisco’s stock also pressured index futures, sending the Nasdaq futures (.NDc1) down 14.75 points in after-hours trading.

During the regular session, Boeing Co’s (BA.N) stock dropped 3.2 percent to $67.07. The U.S. aircraft manufacturer halted test flights of its long-delayed 787 Dreamliner, a day after smoke in the main cabin of one of the planes forced an emergency landing in Texas.

U.S.-traded shares of BlackBerry maker Research in Motion (RIM.TO)(RIMM.O) jumped 6.3 percent to $58.44 after the Canadian company, a late entrant in the booming tablet market, said it will take on Apple’s iPad with competitive pricing of its rival Playbook device.

Polo Ralph Lauren Corp (RL.N) reported better-than-expected quarterly profit and raised its sales outlook, sending its stock up 7.3 percent to $108.28.

For the last three sessions, the S&P 500 has run into resistance near 1,228, the closely followed 61.8 percent retracement of the slide between the 2007 high and the 12-1/2-year low set in March 2009. A failed attempt to pierce the 1,228 level, back in April, preceded the benchmark’s slide to its 2010 low hit in early July.

Earlier in the day, economic data showed a larger-than-expected drop in new applications for unemployment insurance. The data came in less than a week after the government said employment surged in October.

Trading volume was about 8.3 billion shares on the New York Stock Exchange, the American Stock Exchange and Nasdaq, compared with the year-to-date daily average of 8.72 billion.

About 18 stocks rose for every 11 that fell on the New York Stock Exchange, while on the Nasdaq, about two stocks rose for every one that fell.

(Reporting by Angela Moon; Editing by Jan Paschal)

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