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Wall Street extends gains in tandem with overseas markets
September 16, 2009
Wall Street extended its gains Wednesday as the positive mood from overseas helped keep upward momentum following upbeat economic comments from Federal Reserve chief Ben Bernanke.
The Dow Jones Industrial Average climbed 38.84 points (0.40 percent) to 9 722.25 at 17:08 SA time trades after gains Tuesday for the seventh time in the prior eight sessions.
The Nasdaq composite increased 10.24 points (0.44 percent) to 2 112.88 percent and the broad-market Standard & Poor's 500 index rose 7.10 points (0.67 percent) to 1 059.73.
Fuelling the latest gains overseas were comments Tuesday by Bernanke, who said the recession "is very likely over" in his clearest comments to date that the world's biggest economy has turned the corner.
"Investor sentiment continues to benefit from upbeat commentary by Federal Reserve chairman Ben Bernanke, as well as merger and acquisition activity," said Joseph Hargett at Schaeffer's Investment Research.
Adding to the positive mood was data showing US industrial production jumped 0.8 percent in August, the second straight monthly gain after a revised 1.0 leap in July.
"The gains in production in July and August support our view that the economy emerged from recession in the third quarter," said Dawn Desjardins of RBC Economics Research.
The market also took comfort from data showing US consumer prices rose 0.4 percent in August, with the core inflation rate up a modest 0.1 percent. This served to ease fears about both deflation and resurgent inflation.
Brian Bethune, economist at IHS Global Insight, said the report suggests the deflation threat is fading.
"The steepest CPI declines are now behind us," he said. "Year-on-year inflation should be back in positive territory by the end of the year as gasoline price comparisons continue to become less favorable."
On the merger front, news that software maker Adobe Systems agreed to buy Web analytics firm Omniture for 1.8 billion dollars helped sentiment as a sign of confidence in the corporate outlook.
Omniture shares leapt 25 percent to 21.66 dollars while Adobe fell 6.5 percent to 33.30 dollars.
United Airlines parent UAL Corp. rallied 3.98 percent to 9.14 dollars after reaffirming its quarterly outlook.
Bristol-Myers Squibb added 0.90 percent to 22.45 dollars after agreeing to sell some assets in Asia Japan's Taisho Pharmaceutical Co. for 310 million dollars.
Bonds fell. The yield on the 10-year US Treasury bond increased to 3.480 percent from 3.452 percent Tuesday and that on the 30-year bond rose to 4.290 percent against 4.262 percent. Bond yields and prices move in opposite directions. - AFP
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