Friday 31 October 2008

US stocks jump to add to week's large gains

Wall Street bolted higher on Friday as investors looked to extend the week's big gains, even after a report that showed worried consumers
are cutting back on their spending. The major market indexes each rose more than 1.5 percent, including the Dow Jones industrial average, which jumped 200 points.

The Commerce Department said personal spending fell by 0.3 percent last month, as expected, the biggest decline since June 2004. Combined with flat readings in both July and August, it led to the worst quarterly performance in 28 years.

But Wall Street's reaction to the data was far from frantic. Given this week's readings on flagging consumer confidence and shrinking gross domestic product, investors have largely discounted the fact that Americans are fearful about the economy and their shrinking investment portfolios.

October has been the worst month for the market in 21 years — and many stocks are looking like bargains right now. Heading into the session, the Standard & Poor's 500 index was down 18.2 percent for October; the index fell 21.8 percent in October 1987.

Before committing to a direction, the market is going to want to put the presidential election next week behind it and focus on the October employment report due next Friday — which should provide some insight into how long and how severe the economic downturn could be.

The market is "settling into a little bit of a holding pattern" ahead of the election and jobs report, said Craig Peckham, market strategist at Jefferies & Co. "The fear level has clearly subsided, but there's still a pervasive tone of unease."

In early afternoon trading, the Dow rose 198.24, or 2.16 percent, to 9,378.93.

Broader stock indicators also advanced. The S&P 500 index rose 22.98, or 2.41 percent, to 977.07, while the Nasdaq composite index rose 32.93, or 1.94 percent, to 1,731.45.

The Russell 2000 index of smaller companies rose 19.07, or 3.71 percent, to 533.25.

Source: EconomicTimes

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