Daily Comments
US: the marker rebounds on manufacturing data
02.09.2010 13:00:00 Natalya Malykh, Analyst, Global Markets (Finam)
On Wednesday, September 1, the US stock market posted solid gains on the back of strong ISM Manufacturing data and the Challenger Job-Cut Report according to which most industries grew in August and the number of projected layoffs declined.
Eleven of the 18 manufacturing industries reported expansion in August, e.g. food, beverage and tobacco products, transportation equipment, computer and electronic products. Conversely, one third of industries reported contraction (petroleum and coal products, machinery, nonmetallic mineral products, plastics and rubber products and furniture). All in all, the ISM manufacturing index reached 56.3, far above the forecast.
The newly released Challenger Job-Cut Reports on corporate layoffs added optimism. The number of layoffs fell to 34,768 in August, which is the lowest monthly level since June 2000. The market remained unfazed by the ADP employment gauge which pointed to a 10,000 drop instead of the predicted increase by 19,000.
The blue-chip metric Dow Jones Industrial Average Index rose 2.54% to 10,269.47, the broad-based gauge S&P 500 Index added 2.95% to its market value and closed at 1,080.29, while the tech-focused Nasdaq Index gained 2.97% to close at 2,176.84.
COMEX gold futures for December delivery slipped USD 2.20, or 0.2%, to USD 1,248.10/oz.
Light, sweet crude oil futures for October delivery moved up USD 1.99, or 2.8%, in NYMEX trading and traded at USD 73.91/bbl, brushing off data released by the EIA last week that pointed to a 3.425-mn bbl build compared to the anticipated increase by a mere 1.1. mn bbl. Thus, upbeat manufacturing data from the United States and China outweighed the build in crude oil stockpiles.
Oil&gas plays jerked up amid rising crude oil prices, with Exxon Mobil up 3.04%, ConocoPhillips adding 3.109% to its market value, Occidental Petroleum advancing 5.17% and Chevron rising 3.63%.
In the blue-chip gauge, best results were staged by Caterpillar (+4.60%), United Tech (+ 3.31%), General Electric (+ 3.83%), Bank of America (+6%) and JPMorgan Chase (+3.80%).
The semiconductor-making sector was boosted by a statement made by research firm Gartner which lifted its forecast for worldwide semiconductor sales to USD 300 bn. Intel rose 2.69%, Texas Instruments grew 3.17% and Broadcom jumped 3.73% on the news.
On the M&A front, we note an acquisition made by ProAssurance which purchased insurer American Physicians Service Group for USD 32.50 per share. The deal was executed in cash. As a result, American Physicians Service Group closed up 23.42%, while ProAssurance gained 3.81%. Biotechnology firm Genzyme continues its bid war. The company’s CEO estimates its value higher than the bid made by French Sanofi-Aventis (USD 69 per share). Genzyme ended the session 0.38% higher at USD 70.38.
Online retailer Amazon.com surged more than 6% after saying it had launched negotiations with media companies, Time Warner in particular, regarding an online video subscription.
