Published: Friday June 5, 2009 MYT 7:33:00 AM
Updated: Friday June 5, 2009 MYT 11:36:01 AM

US stocks up fifth time in six days

NEW YORK: Stocks rose for the fifth time in six days Thursday following a rally in financial and energy shares.

Analysts have upgraded U.S. bank stocks and oil prices hit fresh highs for the year.

Investors gained some confidence in the prospects for the overall economy after the number of workers continuing to receive unemployment benefits unexpectedly fell for the first time in 20 weeks.

Analyst upgrades of bank stocks and rising oil prices attracted investor dollars to those parts of the market.

The drop in unemployment rolls, as well as in weekly claims, provided investors a fresh nugget of hope that the economy could be finding a more stable footing.

The idea that the economy is halting its slide has driven a powerful rally that has lifted stocks more than 30 percent in three months.

The data arrived a day ahead of the government's monthly tally of job losses - often seen as the most important report on the economic calendar.

Investors are looking for any sign that unemployment is ebbing because that could help shore up consumer spending, retail sales and the housing market.

"Things seem to have stabilized and people are hunting for any sort of information they can get to determine the next move in the market and the economy," said Jim Sinegal, equity analyst at Morningstar in Chicago.

The Dow Jones industrial average rose 74.96, or 0.9 percent, to 8,750.24.

The broader Standard & Poor's 500 index rose 10.70, or 1.2 percent, to 942.46.

The Nasdaq composite rose 24.10, or 1.3 percent, to 1,850.02.

In other trading, the Russell 2000 index of smaller companies rose 8.97, or 1.7 percent, to 531.68.

About three stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.4 billion shares compared with 1.3 billion traded Wednesday.

Bond prices fell.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.70 percent from 3.54 percent.

The gains in financial and energy stocks overshadowed mixed reports from retailers on their May sales.

Banks got a boost after RBC Capital Markets analysts said the worst of the financial crisis is over.

The KBW Bank index, which tracks 24 of the nation's largest banks, rose 4.8 percent.

KeyCorp. jumped 90 cents, or 19.6 percent, to $5.50 after an upgrade from RBC, while Goldman Sachs Group Inc. rose $7.32, or 5.2 percent, to $149.47 after a Bernstein Research analyst raised his rating.

The improved data on unemployment claims and a weak dollar helped push oil prices to fresh highs for the year.

That helped energy companies.

Anadarko Petroleum Corp. rose $1.52, or 3.2 percent, to $48.57, while Occidental Petroleum Corp. advanced $1.75, or 2.6 percent, to $68.62.

Retailers like Macy's Inc. and Abercrombie & Fitch Co. lost ground as traders worried that shoppers were still reluctant to spend.

A year ago, sales benefited from government stimulus checks.

Macy's fell 44 cents, or 3.3 percent, to $12.88, while Abercrombie slid $3.75, or 11.8 percent, to $27.95.

Investors have been grappling with mixed signals on the economy.

The market's surge this spring since hitting 12-year lows on March 9 has been driven by better-than-expected data.

But investors are now looking for clear indications that the economy is improving.

"If we're on the cusp of a recovery and a convincing recovery, then the stock market makes all the sense in the world," said Michael Darda, an economist with MKM Partners in Greenwich, Conn.

"If it turns out there is no recovery until next year, then the market could run into some trouble."

On Wednesday, disappointed investors broke a four-day winning streak in the market and sold stocks on weaker-than-expected reports on factory orders and the services industry.

The S&P and Nasdaq hit their highest levels of the year on Tuesday, while the Dow has yet to return to the black for 2009 since the first few days of January.

Scott Jacobson, chief investment strategist at Capstone Sales Advisors in New York, said investors should be careful about expecting that the gains will continue to come.

"It's too late right now to dump all your money into the stock market given where it is," he said.

Investors are likely to remain focused on worrisome factors like unemployment, rising commodity prices and a weakening dollar.

The dollar has fallen steadily since early March as investors' appetite for riskier assets increased.

A falling dollar can trigger inflation, and weakens the buying power of American consumers.

Gold and oil resumed their three-month climbs following sharp pullbacks on Wednesday.

In Latin American stocks surged with oil, copper, soy and other commodities prices on Thursday, rebounding from midweek losses as investors bet that a global economic recovery could boost demand for the region's top exports.

Brazil's benchmark Ibovespa index climbed 2.6 percent to 53,464, with shares in iron ore producer Vale SA rising 2.3 percent and state-run oil company Petroleo Brasileiro SA gaining 2.8 percent amid a jump world crude prices.

The two companies comprise nearly a third of the Ibovespa.

Brazil's currency strengthened by 1.2 percent to 1.95 reals to the U.S. dollar, appearing to stabilize this week after a 29 percent surge from its three-year low in December.

It crossed below the 2-real mark last week for the first time since Oct. 1.

Mexico's IPC index, meanwhile, gained 0.4 percent to 24,748, its third-highest close since Oct. 1.

Shares in billionaire Carlos Slim's regional spin-off Telmex International SAB soared 9 percent, while metals holding company Industrias Penoles SAB gained 5.4 percent and mining company Grupo Mexico SAB rose 4.5 percent.

Wal-Mart de Mexico SAB, Mexico's biggest retailer, climbed 1.4 percent as May sales beat analyst expectations despite the impact of the swine flu, rising unemployment and a shrinking economy, according to Grupo Financiero Banamex.

The four companies together comprise about 22.6 percent of the IPC index.

The peso also strengthened by 1 percent to 13.26 to the dollar as analysts predicted that annual inflation would slow to 4.2 percent this year, according to a survey of 25 financial institutions distributed by Banamex.

Mexico's close trade ties with the United States, which buys about 80 percent of its exports, have left it especially vulnerable to the U.S. recession, slashing trade, investment, tourism and money sent home by migrants.

Its economy shrank 8.2 percent in the first quarter and the central bank on Thursday reported a 16.9 percent plunge in consumer confidence in May from the same month last year - although markets appeared to have expected a bigger decline.

Latin American stocks have been pummeled by the world economic crisis, which has slashed demand for the commodity exports on which many of the region's biggest companies rely.

Yet local markets have outpaced recent gains in the U.S. and Europe as investors bet that a recovery would revive demand for risk and raw materials.

Brazil's Ibovespa is up 49.7 percent from its low on March 3, while Mexico's IPC has gained 47.7 percent.

After a sharp slide on Wednesday, commodities rebounded on Thursday, with oil surging as much as 5 percent to $69.60 a barrel earlier in the day, a new high for the year.

Copper, silver, soybeans, wheat and natural gas futures also climbed.

Elsewhere in Latin America, Peru's IGBVL jumped 3.5 percent to 14,270 while Argentina's Merval climbed 3.4 percent to 1,655, Colombia's IGBC rose 1.1 percent to 9,414 and Chile's less-volatile IPSA gained 0.5 percent to 3,188. - AP

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