Stock Market News for November 4, 2010

The Federal Reserve’s $600 billion stimulus to resurrect an ailing economy had stocks oscillating between gains and losses for much of the session yesterday, but selective buying toward the end helped indices mark modest gains. Although the announcement lifted uncertainty surrounding the program, investors gave a muted response to the widely expected move.

The treasury buying program, to be spread over a period of six months ending in June 2011, would see the central bank buying roughly $75 billion of Treasury bonds each month. However, the Fed said it would adjust the pace of the buying if the need arises.

Stocks started the day on a positive note as Republicans stormed to victory in the House of Representatives. Though the mid-term elections did not deliver a total blow to the ruling Democrats, investors had already priced in the expected losses for the Democratic party.  

This morning’s stock futures suggest gains at opening. Ahead of the opening bell, Dow Jones industrial average futures rose 84 points, or 0.8%, to 11,261. The S&P 500 futures are up 9 points, or 0.8%, to 1,198, while Nasdaq 100 futures rose 18 points, or 0.8%, to 2,182.

Asian markets were broadly higher today amid improved prospects for U.S. economic growth. The Nikkei 225-stock average in Tokyo led the advance with a 2.2% jump even as shares of exporters continued to fell the heat of a weak dollar. In Mainland China, the Shanghai Composite climbed 1.9% to its highest level in 7 months, and the Hang Seng index in Hong Kong rose 1.6%.

The Dow average advanced 26 points, or 0.2%, to close at 11,215, its highest level in more than two years. The NASDAQ also jumped to its highest level since September 2008, gaining 0.3% to 2540. The widely followed S&P500 climbed 0.4% to 1198.

Only two of the S&P500’s ten industry sectors closed with losses: basic materials fell 0.4% and utilities dropped 0.3%. Financials (+0.8%), tech (+0.5%), telecommunications (+0.5%), consumer services (+0.4%) consumer goods (+0.4%), oil and gas (+0.3%), industrials (+0.1%), and health care (+0.1%) led on the upside. Among DJIA’s financial components, JP Morgan (NYSE:JPM - Analyst Report) gained 2.1% and Bank of America (NYSE:BAC - Analyst Report) advanced 1.1%.

The dollar continued its slide after the Fed's announcement, falling 0.3% to 76.623 against a basket of foreign currencies. However, shares in resource-related companies rose as the dollar weakened. Crude prices advanced $0.79 to settle at $84.69. Gold prices fell after the announcement, down $19.30 to $1,337, as investors chose taking profits.

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