Stocks Soar on Services Growth and Japan's Rate Cut
The blue-chip Dow Jones Industrial Average ($INDU) gained 193, or 1.8%, to close at 10,945. The broader S&P 500 ($INX) rose 24, or 2.1%, to 1,161. The tech-heavy Nasdaq Composite ($COMPX) added 55 points, or 2.4%, to finish at 2,400.
Basic materials and capital goods stocks were among the biggest winners after the nation's services sector, which accounts for the bulk of economic activity, beat expectations. Dow components Boeing (BA), Caterpillar (CAT), DuPont (DD) and United Technologies (UTX) led the blue chips higher, rallying 3% or more. Google (GOOG) and Apple (AAPL) paced tech stocks with gains of 3.2% and 3.7%, respectively.
Global Market Gains
The Institute for Supply Management said Tuesday its services index rose to 53.2 last month from 51.5 in August. Economists, on average, expected the measure to rise to 52. ISM index readings above 50 signal an expansion; below 50, a contraction.
U.S. markets followed sharp gains in Asia and Europe overnight after the Bank of Japan announced it would slash its benchmark interest rate to near zero in an effort to revive its sluggish economy. The move comes less than a month after the government intervened in currency rates, buying up dollars in an effort to curb the rise of the yen and to help Japanese exports.
Oil prices closed at a five-month high, as oil for November delivery closed up $1.27 at $82.74 a barrel. Treasury prices held firm, with the yield on the benchmark 10-Year Treasury note unchanged at 2.47%. Bond prices and yields move in opposite directions.
Traders still have to contend with the start of third-quarter earnings season Thursday and September's unemployment report at the end of the week. Year-to-date, the Dow is up 5%, while the S&P 500 has gained 4%. The Nasdaq is up 5.8%. Gold, as measured by the the SPDR Gold Trust exchange-traded fund (GLD), has added 22%.