Written by Reuters
Tuesday, 10 November 2009 06:53
NEW YORK: A broad U.S. stocks rally sent the Dow industrials to a 13-month high on Monday, Nov 9 after the Group of 20 pledged to keep aid flowing to the world economy, strengthening investors' desire for risk, according to Reuters.
The agreement by G20 finance ministers and central bankers over the weekend to keep stimulus in place boosted global stocks on the expectation of prolonged low interest rates.
The U.S. dollar briefly fell to a 15-month low, bolstering commodity prices and materials stocks. Freeport MacMoRan Copper & Gold Inc shares shot up 4.6 percent to US$83.20 and the S&P materials sector index gained 3.2 percent.
"Central banks around the world are continuing to prop up the economy and support risk taking. There's very little regard for valuation," said Jack Ablin, chief investment officer of Harris Private Bank in Chicago.
"It looks to me like a pure risk rally and it is consistent with the G20 comments."
Shares of chipmakers rose sharply, with the PHLX semiconductor index up 3.2 percent, its largest increase in a month. On Monday, Wells Fargo raised its 2010 growth projection for chipmakers.
Among chipmaker shares, Applied Materials Inc rose 5.2 percent to US$12.98 on Nasdaq and Micron TECHNOLOGY [] Inc shot up 6.1 percent to US$7.51 on the New York Stock Exchange.
The Dow Jones industrial average jumped 203.52 points, or 2.03 percent, to 10,226.94. The Standard & Poor's 500 Index rose 23.78 points, or 2.22 percent, to 1,093.08. The Nasdaq Composite Index gained 41.62 points, or 1.97 percent, to 2,154.06.
Lower interest rates worldwide make investing in risky assets like stocks more attractive, and reduce the cost of corporate financing used for investment.
Financial stocks were also top performers in the session, with shares of American Express Co up 4.9 percent at US$39.05. The KBW bank index gained 3.6 percent. - Reuters
