Stocks Gained as European Debt Concern Eased Dow Leaders: JPM, AA, BA, GE, and CAT

Published on Wednesday, 08 September 2010 18:57 Written by Christopher Lynn

New York, September 8^th (TradersHuddle.com) – Stocks gained, bouncing from yesterday’s losses after European debt jitters eased with the euro gaining and Treasuries falling, as demand for riskier assets increased.

The Dow Jones Industrial Average gained 46.32 points, or 0.45%. The S&P 500 index climbed 7.03 points, or 0.64%, while the NASDAQ jumped 19.98 points, or 0.90%. Market breadth was positive. On the NYSE, winners topped decliners by a rate of 7 to 3. On the NASDAQ, advancers outpaced losers by a rate 2 to 1.

The market bounced back, moving to the upside early on as the European jitters eased and the euro gained after a successful Portuguese debt offering reassured market participants that bid the equity and commodity markets higher as demand for riskier assets increased.

Stocks edged higher for the first part of the session, but lost some direction in afternoon trading, with major benchmark averages holding to gains after the Fed released its Beige Book, which is an anecdotal collection of economic information from its 12 districts released eight times a year.

The report warned of signs of a deceleration compared with preceding periods, despite finding continued growth in national economic activity from mid July through the end of August. The report also showed that consumer spending has increased, on balance. However, discretionary purchases continue to be governed by caution.

Consumer credit data was released at the close. After falling $1.0 billion in June, July data showed that credit fell another $3.6 billion, which was less than the $5.3 billion drop that was widely expected.

Financial, industrial, and energy were the best performing sectors. Financial stocks gained as a group 1.1%, helped by strength in regional banks and investment bank and brokerages stocks. Goldman Sachs (NYSE:GS), the premiere Wall Street investment bank, gained helping the sector on reports the bank with several firms about its Principal Strategies proprietary trading group, which apparently will not end in a sale of the unit.

JPMorgan (NYSE:JPM), the second U.S. lender and one of the biggest investment banking firms, also lifted the sector higher, as shares gained 2.19% to $39.12, posting the biggest percentage gain in the Dow Jones Industrial Average.

Boeing (NYSE:BA), the world’s second largest commercial aircraft maker, General Electric (NYSE:GE), the diversified conglomerate maker of power turbines and energy efficient locomotives, and Caterpillar (NYSE:CAT), the world’s largest earthmoving equipment maker, gained more than 1.49%, posting some of the biggest percentage gains in the blue chip index, and helping the industrial to a 1% gain in the session.

Industrial shares moved higher as market participants moved to economic sensitive stocks as the Dollar weakened and as President Obama unveiled more plans to stimulate the sputtering economic recovery. Market participants look at blue chip industrial companies as beneficiaries of global growth, which at this point is seen that it will continue, despite the U.S. weakness.

Boeing also benefited from a new Outperform rating, with a $78 target price at RBC Capital.

Alcoa (NYSE:AA), the aluminum producer, was the second best Dow component, as shares gained 1.93% to $11.07, as the economic sensitive stock also benefited from the greenback weakness and higher metal prices and a sense the global economic growth will continue despite a sputtering domestic recovery. Material stocks gained as a group 0.7%.

The energy sector climbed 0.9%, helped by gains in crude oil, which moved to the upside by 0.6% to $74.67 per barrel, largely on greenback weakness. Gains in BP (NYSE:BP), London based embattled energy giant also helped the sector as it released results from an internal investigation on the events leading up to the oil leak in the Gulf of Mexico. The company concluded that no single factor was responsible.

Meanwhile, Treasuries fell as demand for safe haven assets eased. Ten-year Treasuries pared losses as the $21 billion auction of the securities drew the highest level of participation in a year from a group including foreign central banks. The yield on the benchmark 10-year note climbed to 2.65%.