Stocks Vault on Job Gains and Global Data
The Dow jumped 250 points Wednesday as stocks rallied around the globe on a stream of strong economic news, both abroad and in the U.S., as well as on a less anxious outlook for European sovereign debt.
The Dow Jones Industrial Average ($INDU) gained 2.3% to close at 11,256. The blue-chip index hit an intraday high of 11,276, led by by United Technologies (UTX), Home Depot (HD), Caterpillar (CAT) and Boeing (BA).
The broader S&P 500 ($INX) rose 19 points, or 1.6%, to 1,206. The tech-heavy Nasdaq Composite ($COMPX) added 51 points, or 2.1%, to finish at 2,549.
The biggest news on the domestic front came from private sector hiring, which hit its highest level in three long years. Private employers created 93,000 jobs last month, according to Automatic Data Processing's (ADP) national employment report. Just as important, October's gain was revised substantially higher, which "shows an acceleration of employment and suggests the nation's employment situation is brightening somewhat," ADP said.
The Rally Started in China
A better-than-expected reading on U.S. construction spending also stampeded the bulls, as did an upward revision to U.S. productivity in the third quarter. General Motors (GM) helped rev up traders with double-digit November sales gains. The nation's No. 1 automaker, fresh off its initial public offering, said sales rose 11.4% versus a year ago. Among its four core brands, Buick, Cadillac, GMC and Chevrolet, GM said sales rose nearly 21%. Auto sales for the wider U.S. car industry also showed some zip.
But the global rally started in Asia overnight after a China state manufacturing index showed that the nation's economy is expanding at an accelerating rate. The upturn in Asia spread to Europe, helped by remarks from the European Central Bank indicating it could step up bond purchases of its more debt-troubled nations.
"Well, we certainly won't have to wait long for the ECB to launch [quantitative easing] for PIIGS," Ed Yardeni, president of Yardeni Research, told clients in a note, referring to the wobbly finances of Portugal, Ireland, Italy, Greece and Spain.
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A rising euro helped weigh on the dollar. The U.S. Dollar Index, which measures the greenback against a trade-weighted basket of six major currencies, fell as much as 0.9% at one point in the session, a large move in currency terms. The flight to risk also hurt Treasurys, as the yield on the benchmark 10-year Treasury note jumped to 2.97% from a close of 2.80% Tuesday. (Bond yields and prices move in opposite directions.)
With the dollar down and the risk-trade back on, energy and commodities also rose Wednesday. Gold traded on the Comex division of the New York Mercantile Exchange (CME) added $3 to settle at $1,388 an ounce. Benchmark crude oil closed up $2.56, or 3%, to $86.67 a barrel.
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