FOX Business: The Power to Prosper
Hurricane Irene's wrath failed to stem the bullish sentiment on Wall Street. The blue chips added more than 250 points on Monday, the fifth winning session in the last six, amid easing euro zone debt fears and upbeat economic data.
The Dow Jones Industrial Average jumped 255 points, or 2.3%, to 11,539, the S&P 500 climbed 33.3 points, or 2.8%, to 1,210 and the Nasdaq Composite rose 82.3 points, or 3.3%, to 2,562. The FOX 50 gained 20.3 points to 874.
The month of August has been a rollercoaster ride for the markets -- the Dow has traded in a nearly 1,500 point range with two trading days left . The broad S&P 500 index has soared 7.8% since last Monday, the Nasdaq has leaped 9.4% and the Dow has rallied 6.7%. However, the markets still have a long way to go to come back from an enormous selloff earlier in the month.
Monday's rally was broad, with every major sector ending with sharp gains. Banks shined the brightest on the day, with companies like Bank of America (NYSE:BAC) and Citigroup (NYSE:C) soaring. The banking sector has been particularly volatile in recent weeks as traders have mulled the effect of the euro zone debt crisis on the American banking system.
Industrials such Caterpillar (NYSE:CAT) were also among the day's biggest winners, while consumer staples like Coca-Cola (NYSE:KO) lagged behind modestly.
Bank of America (NYSE:BAC) revealed on Monday it sold 13.1 billion shares of China Construction Bank, which the country's largest bank expects will generate $8.3 billion in cash. The cash is valuable for the bank that has fallen substantially amid concerns over its capital level.
Greek Bank News Lessens Euro Debt Worries
Greece's two largest banks, Alpha Bank and EFG Eurobank Ergasias, announced plans on Monday to merge, creating the country's biggest bank. The move, and hopes that it may bring some stability to the embattled banking sector, sent Greek markets spiking, and provided a boost to broader European markets. Shares of National Bank of Greece (NYSE:NBG) that are traded on the New York Stock Exchange surged more than 30% on the news.
Hurricane Irene pounded the East Coast over the weekend, killing at least 20 people, causing widespread flooding and wind damage, and leaving millions without power. While it is still difficult to gauge the damage, a survey by Kinetic Analysis Corporation pegs the costs at at least $7 billion. Insurers such as Allstate (NYSE:ALL) and Travelers (NYSE:TRV) actually rallied on Monday, however, as the damage appears to be less than initially anticipated by many market participants.
Companies that sell home repair and improvement goods such as Home Depot (NYSE:HD) and Lowe's (NYSE:LOW) lagged behind conversely.
Bright Spots in Consumer Spending, Pending Home Sales
The economic calendar is busy this week, with the highly-anticipated monthly unemployment report on tap for Friday and several other important reports slated for release as well.
Consumer spending increased by 0.8% last month, topping forecasts of 0.5%, while personal income rose by 0.3% as expected. Excluding the impact of inflation, spending was up 0.5% -- the biggest gain since December 2009. The data, however, are a substantially lagging indicator, and more recent data have shown the economy deteriorated this month.
"The economic world changed for the worse in August making July data somewhat old news in terms of gauging trends," Peter Boockvar, managing director at Miller Tabak + Co., wrote in a research note.
While the state of the consumer factors in to many areas of the economy, one of the sectors that is particularly affected by these is retailers such as Wal-Mart (NYSE:WMT) and Best Buy (NYSE:BBY).
The housing market remains strained by still-tight lending conditions, and a glut of homes on the market, making supply high and demand low. However, it has showed some signs of improvement. Pending home sales were down 1.3% last month, which was in line with economists' expectations, but they were up 14.4% from the same period last year.
Energy markets posted modest gains last week, were mixed on Monday.
Light, sweet crude climbed $1.90, or 2.2%, to $87.27 a barrel. Wholesale RBOB gasoline fell 2 cents, or 0.96%, to $2.91 a gallon.
Gold extended steep losses from last week, but only remains 5% off of the record settle. The metal fell $5.70, or 0.32%, to $1,788 a troy ounce.
In currencies, the U.S. dollar edged higher by 0.01% against a basket of world currencies, while the euro gained 0.08% against the greenback.
Prices at the pump moved higher over the weekend. A gallon of regular costs $3.61 on average nationwide, down from $3.71 last month, but well higher than the $2.68 drivers paid last year, according to the AAA Fuel Gauge report.
American Express (NYSE:AXP) said its headquarters in lower Manhattan would be closed on Monday as a result of Hurricane Irene.
Stock markets in the U.K. were closed for a holiday. The French CAC 40 leaped 2.2% to 3,154 and the German DAX soared 2.4% to 5,670.
In Asia, the Japanese Nikkei 225 rose 0.61% to 8,851 and the Chinese Hang Seng climbed 1.4% to 19,865.