Stocks extend post-polls rally


By MEGAN DAVIES

NEW YORK: US stocks extended their post-election rally for a third session on Friday, with the Dow striking a four-month high after a government report showed strong jobs growth last month, boosting hopes that the economic recovery is taking hold. 

Meanwhile, shares of S&P component Sears, Roebuck & Co. jumped more than 25% to US$46.90 after real estate company Vornado Realty Trust said it raised its stake in the retailer, a step that could lead Sears to convert some of its real estate assets into cash. 

The Dow Jones industrial average rose 72.78 points, or 0.71%, to close at 10,387.54. The Standard & Poor’s 500 Index was up 4.50 points, or 0.39%, to end at 1,166.17. 

The technology-laced Nasdaq Composite Index was up 15.31 points, or 0.76%, to finish at 2,038.94. 

For the week, the Dow gained 3.6%, while the Nasdaq and the S&P 500 each gained about 3.2%. 

The Dow and Nasdaq closed at their highest since June 30. The S&P, which was at its high since March 2002 for the second session in a row, has risen for nine consecutive sessions. 

Friday's gains extended the rally that began on Wednesday, sparked by the re-election of President W. Bush and investors’ relief that the election resulted in a clear winner. 

The certainty of a second term for Bush boosted stocks of companies in the health and defence sectors, which are likely to benefit from the Republican administration's policies. 

“There’s a lot of cash on the sidelines and people want to see this market go up – people are now looking for reasons to buy stocks, not reasons to sell stocks,” said Michael Murphy, managing director Wachovia Securities. 

The rally gained ground after data from the Labor Department showed 337,000 jobs were added to payrolls last month – about twice the growth of 169,000 jobs that Wall Street economists had forecast. This is the first time stocks have risen on the day of the closely watched monthly jobs data since June’s report. 

“The jobs report was a very positive step for the market. I wouldn’t bet the ranch on it, but it’s a very good number,” said David Memmott, head of listed block trading at Morgan Stanley. 

“There’s no doubt that the resolution to the election has also helped. We’ve come very far, very quickly.” 

However, there was some caution caused by the dollar weakening further. 

The dollar fell to a record low against the euro on concerns about the US trade imbalance. 

The euro was around US$1.2962. A prolonged decline in the dollar makes US assets less appealing to international investors because it erodes their return. 

Meanwhile, oil prices paused for breath following a sharp drop in recent days. Nymex December crude futures rose 79 cents to settle at US$49.61 – below the psychological US$50 mark. 

Analysts said relatively lower crude prices may be helping industrial conglomerate 3M Co., which rose 4.3%, or US$3.32 to US$81.40 and was the biggest boost to the Dow. 

Dmitry Silversteyn, an analyst with Longbow Research, noted higher oil prices can act like an invisible consumer tax and 3M has many consumer-oriented products. 

“With oil prices going down, that concern is diminishing,” he said. 

While the jobs numbers helped the overall market, analysts said it made an interest rate hike next week more of a done deal. The Federal Open Market Committee meets Nov. 10. 

Interest rate sensitive stocks such as financials lagged. Wachovia Corp slipped 54 cents to US$51.07. 

Among other stocks, Pixar Animation Studios Inc reached an all-time high on expectations that its latest animated film, The Incredibles, will be a box-office hit. Pixar shares rose US$3.59, or 4.4%, to US$84.45. 

Goodyear Tire & Rubber Co forecast a quarterly profit and sales that exceeded most analysts’ estimates. Goodyear shares rose US$1.57, or 15.4%, to US$11.80. 

Shares of Cisco Systems Inc gained 45 cents, or 2.3%, to US$19.97, lifting the Nasdaq and the S&P 500. 

Cisco, the largest maker of gear for directing Internet traffic, is scheduled to release its first quarter fiscal year results on Tuesday. 

“They historically beat by a penny and I expect that’s probably what they will do again. That could boost its stock and the market,” said Peter Zuleba, senior portfolio manager, The Glenmede Trust Company. 

While stocks closed ahead, indexes dipped around midday as rumours of an explosion in Russia wobbled investors, traders said. 

It later emerged that one reactor at a Russian nuclear power station was closed down after a malfunction, but there was no leak of radiation, Russian news agencies reported. - Reuters  

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