Posted: 27 May 2009 0544 hrs
Traders work on the floor of the New York Stock Exchange (NYSE)
NEW YORK - Wall Street powered higher Tuesday as a surprisingly strong reading on US consumer confidence buoyed hopes of economic recovery, offsetting jitters over North Korea's nuclear and missile tests.
The blue-chip Dow Jones Industrial Average climbed 196.17 points (2.37 percent) to end at 8,473.49 while the tech-rich Nasdaq rose 58.42 points (3.45 percent) to 1,750.43, its best percentage advance since early April.
The broad-market Standard & Poor's 500 index advanced 23.33 points (2.63 percent) to 910.33, clawing its way back above the psychologically significant 900 level for the first time since May 20.
As traders returned to business following the Memorial Day holiday Monday, stocks came under early pressure amid geopolitical concerns stemming from North Korea's second illegal nuclear test on Monday.
But markets shook off the news after the release of a Conference Board survey showing an unexpected surge in US consumer confidence, a key to ramping up spending and lifting the economy out of its prolonged recession.
The business research group's consumer confidence index spiked to 54.9 in May from 40.8 in April, the highest since last September.
"An unexpectedly large jump in consumer confidence is pushing markets higher, negating early weakness from geopolitical concerns regarding North Korea's nuclear program," analysts at Charles Schwab & Co wrote.
The consumer confidence data "gave participants some anecdotal evidence that economic conditions may be improving, which brought about broad-based gains for the major indices," said analysts at Briefing.com.
Retail stocks responded to the increase in the consumer confidence by advancing "though higher consumer confidence has yet to translate into higher consumer spending," the analysts cautioned.
"The (consumer confidence) report had a positive effect on retailers and technology companies," said Wachovia Securities senior equity market strategist Scott Marcouiller.
Large-cap tech stocks like Apple, which was upgraded by analysts at Morgan Stanley, helped give the Nasdaq a major lift.
Apple closed 6.76 percent higher to 130.78 dollars.
General Motors, widely expected to file for bankruptcy protection ahead of a June 1 deadline imposed by the Obama administration, rose 0.7 percent to 1.44 dollars after recovering from a loss of more than 10 percent.
Reports had said the government will provide more massive financial aid to the country's number one carmaker, which reached a deal with the UAW union on cost-saving concessions that still must be ratified by rank-and-file workers.
The largest increase in the Dow Jones index came from JPMorgan Chase, rising 6.19 percent to 36.54 dollars.
Bonds, which plunged last week amid US credit rating worries, ended lower after an opening bounce.
The yield on the 10-year US Treasury bond rose to 3.493 percent from 3.448 percent on Friday and that on the 30-year bond climbed to 4.446 percent from 4.392 percent.
Bond yields and prices move in opposite directions.
- AFP /ls
From ChannelNewsAsia.com; see the source article here.
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