US stocks rose more than 10 per cent today, the second-biggest point gain ever for the Dow and S&P, after investors scooped up beaten-down shares on optimism that the US Federal Reserve and other central banks will cut interest rates further.
Hopes for a rate cut grew at midday after a newspaper reported the Bank of Japan is considering lowering rates, further fueling hopes for a Fed cut after its latest policy meeting tomorrow. Lower borrowing costs could help bolster corporate profits as the economy heads toward a deep recession.
Japan's Nikkei newspaper report pulled the yen down more than 5 per cent against the dollar, easing worries after a recent sharp rally in the Japanese currency that had slammed global markets. Today, the yen suffered its biggest daily drop against the US dollar since 1974.
Shares of capital-intensive companies such as telecoms posted the day's sharpest gains, including Verizon Communications, up over 14 per cent, and AT&T, up over 13 per cent.
Big oil companies gave the Dow its biggest boost after British major BP Plc reported a record quarterly profit, beating expectations. Exxon Mobil and Chevron both rose more than 13 per cent.
Shares of Boeing jumped more than 15 per cent to $48.91 after the aircraft manufacturer came to a tentaive agreement with its largest union to end a strike and stop revenue losses estimated at $100 million a day.
The Dow Jones industrial average jumped 889.35 points, or 10.88 per cent, to 9,065.12. The Standard & Poor's 500 Index surged 91.59 points, or 10.79 per cent, to 940.51. The Nasdaq Composite Index ran up 143.57 points, or 9.53 per cent, to 1,649.47.
It was the second-biggest point gain ever for the Dow and the S&P.
The yen's recent rally has forced an unwinding of the so-called "carry trade" -- a phenomenon of Japan's low interest rates, in which investors borrowed yen to finance investments in high er-yielding assets, such as US stocks.
Wal-Mart's stock rose after the world's largest retailer stuck to its 2009 sales growth forecast, saying it will weather the economic turmoil now and could come out even stronger than its rivals when the economy rebounds. Wal-Mart shot up 11.1 per cent to $55.17 on the New York Stock Exchange.
The rally came despite an economic picture that remained gloomy after data showed U.S. consumer confidence tumbled to a record low in October as the financial crisis made Americans anxious about their jobs and pessimistic about the future.
Verizon ended at $31.65, up 14.6 per cent, and AT&T finished at $27.61, up 13.2 per cent, in NYSE trading.
In the oil sector, Exxon climbed 13.3 per cent to $74.86, while Chevron soared 13.5 per cent to $70.02. The big energy producers' shares gained even as front-month U.S. oil futures slipped 49 cents to settle at $62.73 a barrel.
Whirlpool Corp tumbled 8.3 per cent to $45.87 after the world's biggest appliance maker said it would cut 7 per cent of its workforce and slashed its 2008 earnings outlook amid weakening demand.
Trading was moderate on the New York Stock Exchange, with about 1.73 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion. Most of the volume came in the last hour of trading.
On Nasdaq, about 2.77 billion shares traded, above last year's daily average of 2.17 billion.
Advancing stocks outnumbered declining ones on the NYSE by about 4 to 1 while on the Nasdaq, slightly more than two stocks rose for every one that fell.
Reuters