WORLD> America
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WORLD> America
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Stocks surge; S&P 500 turns positive for 2009
(Agencies)
Updated: 2009-05-05 11:28 Separately, the Commerce Department said construction spending rose 0.3 percent, the best showing since a similar increase last September. Economists surveyed by Thomson Reuters had expected spending to drop 1.5 percent. Jerry Webman, chief economist at Oppenheimer Funds Inc., said stocks are rallying because investors aren't fearful as they were months ago that the economy is headed for the abyss. "There's been this fear that every six months another shoe drops and maybe there isn't a shoe in mid-air right now," he said. The pending home sales data touched off a rally in home builder stocks. KBR Inc. rose $1.25, or 7.9 percent, to $17.15, while Lennar Corp. rose 88 cents, or 9.3 percent, to $10.34. The market's enthusiasm will be put to several tests this week including the April employment report, one of the most closely watched economic indicators, which comes out on Friday. Another concern for the market is the release Thursday of the results of the government's "stress tests" on the 19 largest US financial companies. Some analysts have worried in recent weeks that renewed anxiety about the state of the financial system could upend the market's powerful two-month advance. But investors set aside some worries about financial companies even as analysts predict that the tests -- designed to determine which banks would need more cash if the recession worsens -- will show that several banks need more capital. The Financial Times reported Sunday that Citigroup Inc. and Bank of America Corp. are working on plans to raise more than $10 billion each as they negotiate with regulators over the findings of the stress tests. Citigroup declined to comment, and a Bank of America spokesman called the report "completely inaccurate." Citi rose 23 cents, or 7.7 percent, to $3.20, while Bank of America jumped $1.68, or 19.3 percent, to $10.38. Investors shrugged off word that regulators told Wells Fargo & Co. to shore up its finances after the "stress tests" showed the bank would have trouble surviving a deeper recession. Wells Fargo is one of several banks regulators will force to have larger capital buffers to protect them against possible future losses, according to two people familiar with the matter who spoke to The Associated Press on condition of anonymity because of the sensitivity of the process. The company declined to comment. Wells Fargo rose $4.64, or 23.7 percent, to $24.25. In other trading, the Russell 2000 index of smaller companies rose 19.84, or 4.1 percent, to 506.82. About five stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 6.9 billion shares compared with 5.2 billion shares traded Friday. The economic reports and a big purchase of government debt by the Federal Reserve left bonds little changed. The yield on the benchmark 10-year Treasury note slipped to 3.16 percent from 3.17 percent late Friday. The dollar was mixed against other major currencies, while gold prices rose. Light, sweet crude rose $1.27 to settle at $54.47 on the New York Mercantile Exchange. Overseas, Germany's DAX rose 2.8 percent and France's CAC-40 gained 2.5 percent. Markets in Japan and London were closed for holidays.
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