FOX Business: The Power to Prosper
The bulls on Wall Street continued their hot start to December by piling another 100 points onto the Dow on Thursday in response to the resurgent euro, an unexpected jump in pending home sales and impressive sales in November from retailers.
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The Dow Jones Industrial Average jumped 106.63 points, or 0.95%, to 11362.41, the Standard & Poor's 500 added 15.46 points, 1.28%, to 1221.53 and the Nasdaq Composite gained 29.92 points, or 1.17%, to 2579.35. The FOX 50 picked up 10.91 points, or 1.26%, to 873.86.
Sandwiched between Wednesday's 250-point surge and Friday's crucial jobs report, the triple-digit performance impressed many on Wall Street.
"December has certainly started out with gangbusters," said Peter Kenny, managing director at Knight Capital Group. He credited a growing sense that "the global recovery has engaged" and "we can grow our way out of the staggering debt" in Europe and elsewhere.
Worries about the global and domestic economies were soothed on Thursday big sales increases from retailers like Abercrombie & Fitch (NYSE:ANF), the surprise surge of pending sales of existing homes in October and a second day of big gains for the close-watched euro.
Almost all 30 blue-chip stocks landed in the green, led by Home Depot (NYSE:HD), Bank of America (NYSE:BAC) and Alcoa (NYSE:AA). The index's worst performers were Kraft (NYSE:KFT) and Cisco Systems (NASDAQ:CSCO).
The Nasdaq Composite advanced nearly 1.2%, driven higher by big gains for Microsoft (NASDAQ:MSFT) and Adobe (NASDAQ:ADBE).
December is off to a predictably bullish start as the month has seen the S&P 500 jump an average of 1.8% over the past 64 years -- beating all other months of the year, market watcher Ed Yardeni wrote in a note. Given the generally positive opinions about the holiday-shopping season, Yardeni said he expects a positive end to 2009.
However, the Dow has climbed about 350 points in the span of just two days, leading some to worry the rally may have been overdone.
"I think if anything we may be ahead of ourselves here," said Kenny.
Wall Street's rally gained steam after the National Association of Realtors said pending sales of existing homes soared by 10.4% in October, compared with forecasts for a decline of 1.5%. Sales were off 20.5% from October 2009. The markets cheered the surprise jump in sales, bidding up home builders like Pulte (NYSE:PHM) and Hovnanian (NYSE:HOV) as well as home improvement retailers Home Depot and Lowe's (NYSE:LOW).
U.S. markets continue to tie its fate to the euro, following the currency back into positive territory as it shook off disappointment that the European Central Bank did not announce plans to expand the central bank's bond purchases or institute new funding facilities. After sinking 0.3% in the wake of the ECB decision, the euro did a 180 and was up 0.65% to $1.3223 as Wall Street closed.
Europe has been rocked by its sovereign debt crisis, which has already forced Greece and Ireland into bailouts and threatens Portugal and maybe even Spain next. The developments on the other side of the Atlantic hold sway over Wall Street because a cheaper euro/stronger dollar weighs on commodities and U.S. exports.
The commodities complex followed the euro up, with crude oil rising $1.25 a barrel, or 1.44%, to $88.00. Gold gained $1.20 a troy ounce, or 0.09%, to $1,398.50.
Meanwhile, retailers released largely positive same-store sales reports for November, including stronger-than-expected increases from discount giant Target (NYSE:TGT) and Abercrombie & Fitch (NYSE:ANF). There were only a few disappointing reports, including one from Aeropostale (NYSE:AEO). Overall, Thomson Reuters said same-store sales climbed 6% in November, nearly doubling estimates from analysts for a rise of 3.6%.
The news wasn't all positive, however, as the Labor Department said initial jobless claims jumped by 26,000 last week to 436,000. Economists had been calling for a smaller decline. But the four-week moving average for weekly claims slid to a fresh two-year low, a bullish sign. The report comes a day before the government's all-important monthly jobs report, which is expected to show the U.S. added 140,00 jobs last month.
Bank of America (NYSE:BAC) is most likely the target of a WikiLeaks document dump, FOX Business’s Charles Gasparino reported. BofA, the largest U.S. bank, has assembled a legal SWAT team to prepare for the potential disclosure from WikiLeaks, which earlier this week embarrassed the U.S. with a document leak.
Abercrombie & Fitch (NYSE:ANF) soared 11% to 52-week highs after blowing away estimates with a 22% surge in November same-store sales. Analysts had been calling for a rise of just 6.8%. Domestic sales jumped 25%, while international sales leaped 73%.
PepsiCo (NYSE:PEP) unveiled a $5.4 billion deal to take a 66% stake in dairy and juice maker Wimm-Bill-Dann Foods (NYSE:WBD), making the U.S. company the largest food and beverage maker in Russia. PepsiCo said it will offer to buy the remaining shares of the Wimm-Bill-Dann. The $33-a-share price tag on the Russian company marks a 32% premium to the its 30-day average trading price.
Aeropostale (NYSE:ARO) tumbled 14% a day after co-CEO Mindy Meads resigned and it posted an unexpected 1% decline in November same-store sales. The retailer also narrowly topped estimates with a non-GAAP profit of 67 cents a share.
General Motors (NYSE:GM) made a $4 billion contribution to its underfunded retirement pension plan in an effort to address one of its biggest question marks since becoming a publicly-traded company once again. The auto maker said $2.7 billion will go to the hourly plan, with the remainder for the salaried plan.
The U.K.'s FTSE 100 rallied 2.22% to 5767.56, Germany's DAX climbed 1.32% to 6957.61 and France's CAC 40 soared 2.12% to 3747.04.
In Asia, Japan's Nikkei 225 leaped 1.81% to 10168.50, Hong Kong's Hang Seng jumped 0.86% to 23448.80 and China's Shanghai Composite advanced 0.71% to 2843.61.