FOX Business: The Power to Prosper
Wall Street posted sharp gains across the board, with the Dow leaping more than 300 points, shrugging off an earthquake that shook the eastern seaboard of the United States and a bout of weak housing and manufacturing data.
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A 5.8 magnitude earthquake that hit in Virginia shook the East coast of the United States on Tuesday afternoon. In fact, tremors could actually be felt on the floor of the New York Stock Exchange and as far north as Boston.
While government agencies worked to assess the damage, preliminary reports suggested damage was minimal. However, ten nuclear power plants had so-called unusual events resulting from the quake. An unusual event doesn't imply any damage was done, and is the lowest level emergency the Nuclear Regulatory Commission can utilize. Meanwhile, AT&T (NYSE:T) reported disruptions to phone service and flights were delayed across the eastern seaboard.
While stocks briefly trimmed gains, Wall Street recovered quite quickly, and headed back toward session highs. Certain insurers such as Travelers (NYSE:TRV) fell very slightly on the news.
Technology shares like Amazon.com (NASDAQ:AMZN), materials firms like Dow-component Alcoa (NYSE:AA) and consumer-driven shares like Tiffany (NYSE:TIF) were among the best performing in early trading.
While the markets were in positive territory, Bank of America (NYSE:BAC) shares fell by more than 1% amid concerns the country's biggest bank by assets may need additional capital.
The stock is down 33.9% this month, and 51.9% for the year as of Monday's close. Indeed, the cost to insure the bank's debt rose to a record high -- even topping costs during the financial crisis -- in the Credit Default Swap market, according to the Wall Street Journal.
Economy Takes the Spotlight
With a slew of data pointing to a softer economic recovery -- or potentially even a double-dip recession -- economic reports from across the globe have oftentimes had a considerable impact on Wall Street in recent weeks.
Federal Reserve Chairman Ben Bernanke is expected to make a speech at at the Jackson Hole economic symposium on Friday. Bernanke unveiled the central bank's large-scale asset-buying program, referred to as QE2, at the same even last year. Traders are speculating that the Fed chief will announce some type of additional stimulus this year as well in light of weakening economic conditions, according to Yusuf Heusen, a sales trader at IG Index, a London-based trading firm.
The Commerce Department reported sales of single-family homes dropped 0.7% to an annual-unit rate of 298,000 last month, missing expectations of 310,000 annual rate. However, the number of new homes on the market fell to a record low of 166,000 units, which may help stabilize prices. In fact, the median home price climbed 4.7% on the month to $222,000.
Conditions in the new-housing market remain tough: "despite near record-high home affordability, buyers are having trouble qualifying for a mortgage, selling their current home, and further, are not convinced home prices have reached a bottom," analysts at Nomura wrote in a research note.
The Richmond Federal Reserve's manufacturing gauge fell to -10 from -1 in August, indicating manufacturing in the East has continued weakening. However, a dismal reading of the more closely-watched Philadelphia Fed report foreshadowed these data.
Manufacturing in China, one of the world's largest economies, continued declining for a second straight month in August according to HSBC's China Manufacturing Purchasing Managers Index. However, The reading of 49.8 was modestly higher than the reading 49.3 in July, and better than many economists had feared. Readings below 50 point to contraction, while those above 50 indicate expansion.
Energy markets were solidly higher, boosted by a weaker U.S. dollar. The greenback slid 0.41% against a basket of world currencies, while the euro gained 0.6% against the dollar.
Light, sweet crude rose $1.02, or 1.2%, to $85.44 a barrel. Wholesale RBOB gasoline rose 4 cents, or 1.5%, to $2.88 a gallon.
Prices at the pump have moderated somewhat, tracking weakness in the wholesale market. A gallon of regular costs $3.57 on average nationwide, down from $3.70 last month, but well higher than the $2.71 drivers paid last year.
Gold has pulled back somewhat after settling at a record high in the previous session. The precious metal sunk $30.40, or 1.6%, to $1,858 a troy ounce.
UBS (NYSE:UBS) revealed plans to slash 3,500 jobs in a bid to reduce costs by roughly $2.5 billion.
Covatec has made a roughly $6.3 billion bid for Kinetic Concepts (NYSE:KCI), according to media reports, topping Apax Partners' previously-announced bid of $5 billion.
Goldman Sachs (NYSE:GS) confirmed Monday that it had hired a high-profile defense attorney, sending shares of the investment bank sharply lower immediately before the closing bell.
The English FTSE 100 rose 0.67% to 5,129, the French CAC 40 gained 1.1% to 3,084 and the German DAX jumped 1.1% to 5,532.
In Asia, the Japanese Nikkei 225 rose 1.2% to 8,733 and the Chinese Hang Seng soared 2% to 19,875.