Cyber Monday Rally: Stocks Zoom Higher Amid Record Thanksgiving Sales, EU Hopes
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After getting pummeled over the past two weeks, Wall Street posted big gains on Monday as traders reacted to record retail sales over the Thanksgiving weekend and progress on solving Europe's debt crisis.
Today's Markets
The Dow Jones Industrial Average soared 291 points, or 2.6%, to 11,523, the S&P 500 jumped 33.9 points, or 2.9%, to 1,193 and the Nasdaq Composite rallied 85.8 points, or 3.5%, to 2,527.
After falling close to 1000 points, or 8%, over the past two weeks, the blue chips have rallied on the day. The Nasdaq had an even better performance, its best on a percentage basis since August.
Energy and basic material shares posted some of the biggest gains. In fact, aluminum giant Alcoa (NYSE:AA) was one of the best-performing Dow components.
In a sign of the breadth of the rally, more than 95% of volume on the New York Stock Exchange was in advancing shares. Volatility, meanwhile, tumbled 6.8%. Yields on U.S. Treasuries climbed as traders raced back into equity markets. The benchmark 10-year note yields 2.059% from 1.967%.
Despite an unemployment rate that is stuck above the 9% and slow economic growth, American shoppers came out in force on Thanksgiving weekend -- seen as the kickoff of the key holiday shopping season. Retailers raked in $52.4 billion in sales over the weekend, according to the National Retail Federation -- representing a 16.4% surge from last year. The average shopper spent $398.62 from $365.34 the year prior, the trade group said.
A large swath of retailers posted big gains. Electronics giant Best Buy (NYSE:BBY) and department store Macy's (NYSE:M) were among the big retailers to perform the strongest. Analysts are also expecting strong results on so-called Cyber Monday, in which online retailers generally offer their steepest discounts. Indeed, Amazon.com (NASDAQ:AMZN) the biggest online retailer, was up sharply as well.
Market participants were also keeping close tabs on the situation in Europe, where leaders are racing to stem the region's worsening debt crisis. Euro zone leaders, led by Germany and France, are working on a plan to force tighter fiscal integration in the 17-member currency bloc that could be passed by December and implemented early next year, according to a report by the Wall Street Journal.
Officials believe the plan would potentially be able to skirt a time-consuming change to the European Union treaty, and could pressure the European Central Bank to make a much stronger intervention into the bond market, the report said. Several countries, such as Italy and Spain, have seen their bond yields, and therefore borrowing costs, soar, raising the specter that they may require international assistance if action isn't taken to keep the yields in check.
Traders also cited a report by an Italian newspaper that the International Monetary Fund may be preparing a massive loan for Italy worth roughly $800 billion as part of the reason for the optimism. However, the IMF has denied this report.
Analysts that have been closely eyeing the crisis in Europe still struck a cautious tone on Monday. "It is too early to be truly confident," analysts at Barclays Capital wrote in a note to clients, citing a slew of variables that could still obstruct the process.
European blue chips zoomed 5.2% higher, while the euro fell 0.09% to $1.331. The dollar sunk 0.45% against a basket of six world currencies.
Energy markets got a strong boost from rallying equities and a weaker dollar. The benchmark crude oil contract traded in New York jumped $1.44, or 1.5%, to $98.21 a barrel. Wholesale RBOB gasoline surged 7 cents, or 2.8%, to $2.52 a gallon.
In metals, gold leaped $26.00, or 1.5%, to $1,715 a troy ounce.
The economic calendar is fairly light on Monday. ET. Sales of new U.S. homes rose 1.3% in October from September to an annualized rate of 307,000 units, missing estimates of a 315,000-unit rate.
Foreign Markets
European blue chips zoomed 5.2% higher, the English FTSE 100 leaped 2.9% to 5,313 and the German DAX rallied 4.6% to 5,745.
In Asia, the Japanese Nikkei 225 rose 1.6% to 8,287 and the Chinese Hang Seng gained 2% to 18,038.