A good summary from Bloomberg !!
"May 1 (Bloomberg) -- Stocks advanced, sending the Dow Jones Industrial Average to the highest level since 2007, and Treasuries fell as faster-than-forecast growth in manufacturing bolstered optimism in the world’s biggest economy. Australia’s dollar weakened and the nation’s bond yields touched record lows as the central bank cut interest rates. Oil rallied above $106.
The Dow rallied 116.85 points, or 0.9 percent, to 13,330.48 at 12:33 p.m. in New York. The Standard & Poor’s 500 Index rose 1.1 percent to 1,413.76, erasing its April loss, as benchmark indexes in the U.K. and Ireland gained more than 1 percent and Denmark’s rose 0.2 percent. Other European markets were closed for a holiday. Ten-year Treasury yields rose four basis points to 1.95 percent. The Australian dollar slid 0.8 percent to $1.0347 and 10-year note yields slipped as low as 3.53 percent.
All 10 of the main industry groups in the S&P 500 advanced after growth in American factory output unexpectedly accelerated in April, with the Institute for Supply Management’s index increasing to 54.8 from 53.4 and topping the median economist projection for a drop to 53. The report eased concern that manufacturing is slowing after data from the Federal Reserve Bank of Dallas and the ISM-Chicago trailed estimates yesterday.
“The spike in equity markets and reversal in bond markets following the report’s release underscores the nervousness” that had seeped into investors’ minds, Dan Greenhaus, chief global strategist at broker-dealer BTIG LLC in New York, wrote in a note to clients. “If manufacturing is not weakening as the regional surveys somewhat indicated, that would of course be supportive, in the immediate, of high risk asset prices.”
Greenspan’s Call
Former Federal Reserve Chairman Alan Greenspan said U.S. stocks offer good value and are likely to rise as corporate earnings increase over time.
“Stocks are very cheap,” Greenspan said today at the Bloomberg Washington Summit, citing very low price-earnings ratios. “There is no place for earnings to grow except into stock prices,” said Greenspan, who served as Fed chairman from August 1987 to January 2006.
Even after rallying 109 percent from its bear-market low in March 2009, the S&P 500 trades for 14.4 times its companies’ reported profits, data compiled by Bloomberg show. The valuation has been below the five-decade average multiple of 16.3 for two years.
Earnings Season
The S&P 500 fell 0.4 percent yesterday, snapping a four-day rally and extending the index’s first monthly loss of the year to 0.7 percent. About three quarters of the S&P 500 companies that released results since April 10 have beaten profit projections, according to data compiled by Bloomberg. The Dow managed to post a 0.01 percent gain in April, marking a seventh straight monthly advance to match its longest streak since an eight-month rally in 1994-1995.
Energy, financial, technology and consumer companies climbed at least 1 percent to lead gains among the 10 main S&P 500 industries. JPMorgan Chase & Co., Bank of America Corp., Hewlett-Packard Co. and Intel Corp. rose at least 2 percent to lead the Dow’s rally. Canada’s S&P/TSX index increased 0.4 percent.
P.F. Chang’s China Bistro Inc., an Asian-themed restaurant chain, rallied 30 percent after agreeing to be bought by Centerbridge Partners LP for $1.1 billion.
Thirty-year Treasury bonds also retreated, sending their yield up five basis points to 3.16 percent. Rates on two-year notes were little changed at 0.27 percent.
Australia Rate Cut
The Australian dollar weakened against all 16 of its most- traded peers, falling 0.3 percent versus the yen, while the 10- year yield was at 3.54 percent. The dollar reversed earlier losses versus the euro after the ISM report, strengthening 0.1 percent.
The Reserve Bank of Australia lowered its key rate to 3.75 percent from 4.25 percent, the biggest reduction in three years. RBA Governor Glenn Stevens and his board cut the overnight cash rate target to a two-year low of 3.75 percent from 4.25 percent, the deepest reduction in three years.
The half-point cut was “judged to be necessary in order to deliver the appropriate level of borrowing rates,” Stevens said in a statement today. In the next year or two, “inflation will probably be lower than earlier expected” and within the RBA’s target range of 2 percent to 3 percent, he said.
The FTSE 100 advanced for the fifth time in six days as two shares gained for every one that dropped. Lloyds Banking Group Plc rose 8.3 percent as Britain’s biggest mortgage lender said first-quarter profit more than doubled, beating analyst estimates. BP Plc, Europe’s second-biggest oil company, dropped 0.8 percent after profit declined. Man Group Plc slid 5.5 percent as the hedge-fund manager reported $1 billion in client outflows in the first quarter.
Missing Estimates
Japan’s Nikkei 225 dropped 1.8 percent to a 10-week low as Sharp Corp., the nation’s largest producer of liquid-crystal displays, plunged 9.3 percent after forecasting a wider-than- estimated loss. Tokyo Electron Ltd. tumbled 8.3 percent after the chip-equipment maker said profit fell more than expected.
Natural gas rallied 2.6 percent, extending gains after rising 4.5 percent yesterday, as cooler weather forecast for next week may ease a glut and the Energy Department said production in the lower 48 states fell 0.6 percent in February. Copper added 0.3 percent to $3.8410 a pound and oil climbed 1.2 percent to $106.13 a barrel.
Most Asian and European markets were closed for public holidays. China’s Purchasing Managers’Index rose to 53.3 from 53.1 in March, the statistics bureau and logistics federation said today. That’s the highest reading in a year and compares with the 53.6 median forecast in a Bloomberg News survey of 27 economists. "
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net ; Michael P. Regan in New York at mregan12@bloomberg.net
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Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
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