Midday Market Update: Markets Extend Rally On Optimism
August 24th, 2009 at 10:00am by Tom Lydon
U.S. stocks and exchange traded funds (ETFs) are kicking the week off in positive territory as investors become increasingly more confident of a healthy economic recovery.
Comments from Federal Reserve Chairman Ben Bernanke and encouraging real estate reports indicating that the prospects of a near-term economic recovery in the United States are good, which made investors happy. This recent bout of optimism, in addition to good economic news from the eurozone, sent world stocks to a 10-month high.
Additionally, crude oil rallied toward $75/barrel, also reaching a 10-month high. Growing signs of a global economic recovery and rising tensions in Nigeria promoted support in black gold and sent the United States Oil Fund (USO) up 0.9% in intraday trading.
Industrial orders in the 16-nation eurozone rose 3.1% in June from the quarter before, indicating that manufacturing on the continent may be emerging from the recession. A key gauge of the industry’s future growth – new orders – rose in both Germany and France, underscoring improvements in the region.
In shipping news, the Baltic Dry Index, which is already down 26% for the month, is expected to take a further decline, as China puts the brakes on commodity purchases, report Art Patnaude and Neena Rai for The Wall Street Journal. The index is a barometer for shipping costs for commodities and is seen as a key indicator for global economic growth and production. This most recent drop in the index is the sharpest decline since October, when uncertainty sent the index down 72%.
In an attempt to bolster innovation and jump ahead of the curve, cell phone maker Nokia (NOK) announced that it is making an entry into the PC market with the unveiling of its mini-laptop computer. The Netbook computer will utilize Windows software and will be a fully-functional computer with high-speed mobile Internet access capability.
Overall, all three major U.S. indexes were up in morning trading with the S&P 500 leading the pack, up 0.9%, followed by the Dow Jones Industrial Average adding 0.8% and the Nasdaq gaining nearly 0.7%.
For more stories on crude oil, visit our oil category.
Kevin Grewal contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.