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Friday, September 11, 2009

Piling on the Gains: Stocks Rally for 5th Day

Wall Street extended its September rally to a fifth straight positive session on Thursday as the markets ended at 2009 highs amid the latest signs that the worst of the economic downturn may be in the past.
Stocks climbed steadily throughout the day and ended at session highs. The gains give the Dow its second rally of five or more in the past two weeks alone and put the index up nearly 350 points over that span. In fact, the blue chips ended at their best level since Oct. 6 and are now up 47% since hitting a 12-year low on March 9.

The most striking thing about this September rally is that it has come in the face of a chorus of cynics who said (and still say) stocks have gotten too far ahead of the still-weak economy, especially given September's track record for a weak equity market.
Today’s Markets
The Dow Jones Industrial Average rose 80.26 points, or 0.84%, to 9627.48, the Standard & Poor's 500 added 10.77 points, or 1.04%, to 1044.14 and the Nasdaq Composite picked up 23.63 points, or 1.15%, to 2084.02.
For the week:
The Dow is up 186.21, or 2.0 percent.
The S&P is up 27.74, or 2.7 percent.
The Nasdaq is up 65.24, or 3.2 percent.
For the year:
The Dow is up 851.09, or 9.7 percent.
The S&P is up 140.89, or 15.6 percent.
The Nasdaq is up 506.99, or 32.1 percent.

Investors poured money into stocks for a fifth day after a drop in weekly unemployment claims and a spike in oil raised hopes for the economy. The gains have come even as analysts say the market is overdue for a retreat. The Labor Department said that jobless claims fell more than expected to 550,000 last week. A jump in oil lifted energy companies and an upbeat forecast from consumer products maker Procter & Gamble Co. added to enthusiasm about an economic recovery

“A market that is supposed to go down is not going to go down,” said Paul Nolte, director of investments at Hinsdale Associates. “Our call is for a flattish September/October period. If we do get a serious correction, it will be November/December” due to weak consumer spending.

Still, many aren't sold on the rally and are staying cautious.

“There are a lot of clues that maybe this market shouldn’t be where it is,” NYSE trader Doreen Mogavero told FOX Business, pointing to “pathetically weak” volume, selling by insiders and too many secondary offerings. “I’m not sure there’s anything sustainable behind it.”

Crude Remain Supported At $72; Demands Forecasts Raised
Crude oil price remains strong in European morning. The International Energy Agency (IEA) raised its forecast on oil demand, as indicated in the September report. The October contract hovers around 72 as investors await further details on US inventories.

As driven by stronger-than-expected US demand and rapid growth in China, the IEA revised up its demand forecasts for 2009 and 2010, to 84.4M bpd and 85.7 M bpd respectively. There were compared with June's projections of 83.94 M bpd for 2009 and 85.25M bpd for 2010.

According to the agency, 'there is growing evidence that the global economy may be finally stabilizing, with industrial destocking coming to an end, coupled with the effects of large scale government intervention... Oil demand in US, China and other Asia appears to be running stronger than preliminary estimates suggested'. That said IEA is not entirely confident on the market outlook as 'considerable uncertainty regarding the prospects of a sustained US economic recovery'.

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