Written by Reuters
Tuesday, 21 July 2009 06:45
NEW YORK: US stocks jumped on Monday, July 20, driving the S&P 500 to an eight-month closing high, after CIT Group Inc was thrown a lifeline to avoid bankruptcy, and investors bet corporate America would log another strong set of earnings this week, according to Reuters.
Broker upgrades of technology bellwethers, including Cisco Systems, propelled the Nasdaq to its ninth straight daily advance -- matching a streak from July 1998. The Nasdaq closed at a high for the year.
CIT, a lender to nearly 1 million small- and mid-sized U.S. companies, reached a deal with bondholders for US$3 billion in emergency financing, a source familiar with the situation said. CIT's shares soared 78.6 percent to US$1.25.
Investors were encouraged by signs that the CIT rescue was a private-sector measure instead of a government bailout.
"The private money is really the smarter money. They are not going to go in there unless they think it's going to work," said Tom Alexander, head of Alexander Trading, in Savannah, Georgia. "I think that's a healthy sign for the market and a sign of liquidity and a willingness of private participants to step up to the plate."
The Dow Jones industrial average shot up 104.21 points, or 1.19 percent, to 8,848.15. The Standard & Poor's 500 Index gained 10.75 points, or 1.14 percent, to 951.13. The Nasdaq Composite Index rose 22.68 points, or 1.20 percent, to 1,909.29.
Monday's rally extended the market's recovery since the 12-year lows in early March. The Nasdaq hit its highest close since October 2008, while the Dow registered its highest close since January 2009.
The gains put both the blue-chip Dow average and the S&P 500 back into positive territory for the year, with the Dow up 0.81 percent and the S&P 500 up 5.3 percent.
At Monday's close, the Nasdaq was up 21 percent for the year. From a March 9 closing low of 1,268.64, the Nasdaq is up 50.5 percent. Wall Street traditionally defines a bull market as a gain of 20 percent from a recent low.
Analysts who focus on technicals expect more upward momentum after the S&P 500 punched through near-term resistance at the 950 level.
After the closing bell, chipmaker Texas Instruments Inc posted a stronger-than-expected operating second-quarter profit, but its stock slipped 1.1 percent to US$23.35. The stock had ended regular trading at US$23.61.
This week, the earnings season picks up after a strong start from companies such as Goldman Sachs Group Inc and Intel Corp.
Before Monday's opening bell, 71 percent of 55 S&P 500 companies that had reported earnings so far beat expectations, according to data compiled by Thomson Reuters. - Reuters
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