US stocks rally for second straight day

December 03, 2010 | 10:11
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Wall Street stocks on Thursday ended a second straight day of robust gains, lifted by a sharp rise in US home sales and retail sales as the holiday shopping season gets into high gear.

The European Central Bank's decision to continue stimulus measures in an effort to boost the eurozone economy further boosted global stocks markets.

The Dow Jones Industrial Average rose 106.63 points (0.95 per cent) to close at 11,362.41, while the S&P 500 index, a broader measure of the market, advanced 15.46 points (1.28 per cent) to 1,221.53.

The tech-rich Nasdaq gained 29.92 points (1.17 per cent) to 2,579.35.

The market popped after the National Association of Realtors reported pending home sales jumped in October by 10.4 per cent, much more than expected, offering a glimmer of hope to the troubled US housing market.

The housing data boosted housing and construction-related stocks, led by do-it-yourself chain store Home Depot which rose 5.5 per cent and aluminum maker Alcoa, whose stocks jumped 3.8 per cent.

On Wednesday, Wall Street stocks soared after strong US private-sector hiring figures and robust manufacturing data in the United States and China.

Traders appeared unfazed on Thursday by news that initial claims for US unemployment benefits jumped more than expected last week to 436,000. The volatile weekly report came one day before the release of the closely watched monthly unemployment data.

US retailers and department stores offered more optimism after reporting overall stronger-than-anticipated sales results for November, boosting expectations for the holiday shopping season following its kick-off last week.

"The overall picture is looking bright. Shoppers are headed back to stores of every kind," said Paul Ausick of 24/7 WallSt.

Department store chains Nordstrom, Saks and Macy's posted sales growth of 5.1 per cent, 6.1 per cent and 5.3 per cent respectively, all beating forecasts.

Nordstrom shares were down three percent, Macy's stock lost one percent while Saks rose 1.6 per cent.

Clothing store Abercrombie & Fitch saw its stocks soar 11.1 percent after reporting a whopping 22 percent rise in sales last month while The Gap reported a four percent rise in sales, with its shares rising 0.5 per cent.

"An unexpected jump in US pending home sales and mostly better-than-expected November same-store sales results from the nation's retailers are helping the bulls build upon yesterday's global rally, and offset a larger-than-expected increase in US weekly initial jobless claims," said analysts at Charles Schwab.

The European Central Bank's decision to maintain lending rates at one percent and continue its program of buying government bonds also alleviated recent concerns about Europe's sovereign debt troubles.

The US bond market declined.

The yield on the 10-year Treasury bond rose to 3.00 per cent from 2.96 per cent on Wednesday, while that of the 30-year bond increased to 4.27 per cent from 4.24 per cent. Bond prices and yields move in opposite directions.

AFP

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