Stock Market News for September 4, 2009

Stocks broke a four-day losing streak, helped by better-than-projected August sales from retailers but the advance was lukewarm as investors chose to play it safe ahead of today’s non-farm payrolls report.  After touching their 2009 highs, stocks have drifted lower this week on concerns that a major correction is in the offing.  Sentiments are also shaky as September has historically been a rough month for stocks.  

Yesterday, the 30-stock Dow Jones industrial average finished higher by 63.94 points, or 0.69%, at 9,344.61.  The broad Standard & Poor's 500-stock index rose 8.49 points, or 0.85%, at 1,003.24, closing above 1,000 for the first time since Monday; the technology-laden Nasdaq composite index gained 16.13 points, or 0.82%, to 1,983.20.  Twenty two of the thirty DJIA components advanced.

Although stocks traded in a tight range yesterday, the final hour of trading witnessed activity as traders picked up technology and financial stocks.  Better-than-expected results from retailers signaled consumers were beginning to open their wallets.  Gold prices extended their recent gains, and almost touched the psychologically-significant $1000 level, before giving up some gains to settle at $995.80, its highest since February.  The Vix volatility measure eased 6.2% to close at 27.10, signaling the moods were more sanguine than before.  On the New York Stock Exchange, 1.16 billion shares exchanged hands.

Nevertheless, retailers surprised yesterday.  Retailers' comparable sales data posted ahead of expectations for a 3.8% decline in August, although still off 2.9%.  Retailers' shares rose 2% as a group, with Gap (NYSE:GPS) up 7.6%, Saks (NYSE:SKS) rising 7.5%, Aeropostale (NYSE:ARO) 7%, Costco (NASDAQ:COST) 6.6%, Target (NYSE:TGT) 1.7%, Wal-Mart (NYSE:WMT) 1.6%.  Shares of Abercrombie and Fitch (NYSE:ANF) dropped 3.5%. 

The advance in the DJIA was led by financials and basic materials shares, with Bank of America (NYSE:BAC) rising 3.5% and JP Morgan (NYSE:JPM) up 3.1%.  Among the ten S&P500 industry groups, financials and basic material shares advanced 2.2%, and were the leading gainers. Indications that credit markets are showing sings of softening helped financial stocks.  Meanwhile, resource stocks rallied on expectations for continuing China growth. Alcoa (NYSE:AA) jumped 4.0% and the company’s CEO raised China's aluminum demand projection to 4% growth this year from flat.  Caterpillar (NYSE:CAT) rose 3.5% to $45.04.

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