Dow Rides Recovery Wave 108 Points Higher

The Dow continued its steady upward march toward the crucial 10000 level on Wednesday as the bulls cheered a trio of new reports that suggest an economic recovery is underway.

The latest rally, the markets’ eighth in the past nine sessions, was led by the financial sector and fueled by new data that showed improving manufacturing activity, tame inflation and increased optimism on the housing market. The triple-digit climb pushed the markets to their best levels since the height of the credit crisis last fall.
“Little by little, we’re getting signs the economy is getting on its feet and turning around. That’s causing people to have no reason to sell,” said Richard Sparks, senior equities analyst at Schaeffer’s Investment Research.

Today's Markets
The Dow Jones Industrial Average rose 108.30 points, or 1.12%, to 9797.71, the Standard & Poor's 500 added 16.13 points, or 1.53%, to 1068.76 and the Nasdaq Composite picked up 30.51 points, or 1.45%, to 2133.15.

For the week:
The Dow is up 186.30, or 1.9 percent.
The S&P is up 26.03, or 2.5 percent.
The Nasdaq is up 52.25, or 2.5 percent.
For the year:
The Dow is up 1,015.32, or 11.6 percent.
The S&P is up 165.51, or 18.3 percent.
The Nasdaq is up 556.12, or 35.3 percent.

Investors barreled into stocks Wednesday after an upbeat report on industrial production raised hopes that the economy is strengthening. The Federal Reserve's report that industrial activity surged 0.8 percent in August topped expectations. It came a day after Fed Chairman Ben Bernanke said that the recession was likely over.

Earlier it was noted that the broad market indexes were all trading above near-term support. The updated charts are below. The COMP and RUT are actually a bit overextended so it wouldn't be surprising to see a short-term pullback sometime soon. However, keep in mind that recent pullbacks have been short-lived and relatively mild, indicating sideline money is still coming in. And that is where I will pick up next morning.

The most striking thing about the September rally is that it’s occurred with little volatility and in a series of steady advances. Just one of the prior seven up days included a triple-digit gain and the lone losing session took just 22 points off the Dow. In fact, Wednesday's rally was the benchmark index's strongest in nearly a month, since Aug. 21.

Crude Settles Above $72

Crude-oil futures for October delivery climbed $1.58, or 2.2 percent, to $72.51 a barrel on the New York Mercantile Exchange, the highest settlement since Aug. 28. The price has gained 63 percent this year.

Crude oil rose after the U.S. Energy Department reported that inventories dropped to the lowest level since January.
Stockpiles fell 4.73 million barrels to 332.8 million, the weekly report showed. A 2.5 million-barrel decline was forecast, according to the median response of 15 analysts surveyed by Bloomberg News. Imports decreased 2.1 percent to an average 8.9 million barrels a day. “A huge draw in crude is obviously bullish,” said Carl Larry, president of Oil Outlooks & Opinions LLC, a Houston-based energy adviser. Falling imports “may signal that demand outside of the U.S. is stronger than expected,” he said.