Stocks in the United States swept higher on Monday with gains in the energy and financial sectors that appeared for now to give the market a bout of stability after last week’s volatility.
The rally followed a mostly quiet weekend after one of the most tumultuous weeks ever on Wall Street, in which worries about the United States economy and the threat of a financial crisis in Europe overwhelmed traders, sending the main American stock indexes down less than 2 percent.
The higher opening on Wall Street on Monday came after European and Asian markets rallied. A multibillion-dollar Google deal, a rise in commodity prices and the perception that European leaders and the central bank would take measures including bond purchases to support debt-strapped periphery countries could be helping, analysts said, though such sovereign debt and economic problems are expected to remain a factor in the markets.
Google’s announcement of a $12.5 billion deal to acquire Motorola Mobility Holdings, the cellphone unit spun off earlier this year by Motorola, helped raise the technology sector of the S. P. more than 1 percent. Motorola’s shares were up more than 57 percent within the first hour of trading, while Google’s shares slipped.
Energy shares rose more than 2 percent while financial stocks were up nearly 2 percent. As oil prices rose, shares in Exxon Mobil and Chevron were up more than 2 percent.
“The initial fears of Monday and Wednesday of last week were a little bit overdone,” said Russell Price, senior economist with Ameriprise Financial.
While worries about the United States economy have overshadowed the markets for weeks, Mr. Price and several other economists said that investors were taking a second look at some of the causes of the volatility from last week.
“People are taking a more rational view of the path ahead, that some of the problems in Europe can be addressed with additional spending restraint from some of the governments” which will take time, said Mr. Price.
And as for the United States, he added, “there is probably some easing of the anxiety that the double-dip recession is not a sure thing, although today’s Empire manufacturing report was disappointing.”
He was referring to the Empire State Manufacturing Survey, which economists consider when assessing the strength of one of the most important sectors in the economic recovery. The index, produced by the Federal Reserve Bank of New York, fell to a negative 7.72 points in August, after a negative 3.76 points in July, suggesting that business conditions worsened for manufacturers in the New York region.
Financial stocks were up solidly. Bank of America, the most active of the group, rose nearly 4 percent. It took steps on Monday to exit the international credit card business, agreeing to sell its $8.6 billion Canadian card venture to the TD Bank Group for an undisclosed amount and putting its remaining European card portfolio on the block.
Citigroup was up 2.85 percent and Morgan Stanley rose more than 4 percent.
Broader commodity prices were up on Monday, and investors were probably doing some bargain hunting after last week’s declines, said Keith B. Hembre, the chief economist and chief investment strategist at Nuveen Asset Management.
“It is part of the market trying to find its feet,” said Mr. Hembre.
“Despite the bounce on Friday, this market has been really beaten up,” he added.
Around noon, the Dow Jones industrial average was up 108.19 points, or 0.9 percent. The Standard Poor’s 500-stock index gained 13.44 points, or 1 percent, and the Nasdaq composite index was up 18.35 points, or 0.7 percent.
The benchmark 10-year Treasury was 2.25 percent, about even with Friday’s yield.
The Standard Poor’s 500-stock index rose 0.5 percent Friday, after a roller-coaster performance during the week, as investors struggled to assess the impact of the downgrade of United States long-term debt.
In afternoon trading, the Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 1.1 percent, while the FTSE 100 index in London was up 0.8 percent. Gains by Unilever, the British-Dutch consumer products company, and the Swiss drug maker Novartis, helped to support European stocks.
Investors’ attention was focused on a meeting Tuesday of the German chancellor, Angela Merkel, and Nicolas Sarkozy, the French president. The two leaders will be addressing the threat to the euro zone posed by low growth and teetering public finances in some euro members, their room to maneuver circumscribed by fears that France could be next in line for market attacks.
Analysts have said that the meeting falls at a time when investors need to hear from government leaders about new policy measures aimed at addressing some of the debt issues. Mr. Price said the expectation of additional steps could be helping lift stocks on Monday.
“At least that is what the market is perceiving,” said Mr. Price.
Asian shares rose Monday, with the Tokyo benchmark Nikkei 225 stock average gaining 1.4 percent.
The main Sydney market index, the S.P./ASX 200, jumped 2.6 percent. In Hong Kong, the Hang Seng was up 3.3 percent, and in Shanghai, the composite index rose 1.3 percent.
Comex gold futures were down 0.17 percent, to $1,737.20. Crude oil futures for September delivery rose 1.14 percent to $86.35.
Many European investors were taking the Assumption Day holiday off, though markets were open for business across most of the Continent.
In Japan, second-quarter gross domestic product data showing that the economy there had contracted less severely than expected also helped lift sentiment.
The statistics, released by the Cabinet Office early Monday, showed that the Japanese economy, which was battered by a huge earthquake and tsunami in March, had contracted 0.3 percent from the previous quarter, indicating that economic activity had rallied more quickly than expected after the disaster.
The dollar was mixed against other major currencies. The euro rose to $1.4419 from $1.4248 late Friday in New York, while the British pound rose to $1.6355 from $1.6276.
But the dollar was higher against the yen, rising to 76.61 yen from 76.67 yen, and rising to 0.7826 Swiss francs from 0.7777 francs. The Swiss currency lost ground amid reports that the Swiss National Bank was preparing to create a temporary peg to the euro.
Both the Swiss and Japanese authorities have watched with alarm as their currencies rose against the dollar, because an overvalued currency can hurt companies’ export earnings and choke off economic growth.
“Decent data on Thursday and Friday last week brought a semblance of stability to markets,” analysts at DBS in Singapore wrote in a research note on Monday, referring to American retail sales and jobless figures that were both relatively upbeat.
“Housing, inflation and industrial production will have the do the trick this week,” the DBS analysts commented. “It won’t be easy.”
Ben Protess contributed reporting. David Jolly reported from Paris and Bettina Wassener contributed reporting from Hong Kong
Article source: http://www.nytimes.com/2011/08/16/business/daily-stock-market-activity.html?partner=rss&emc=rss
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