The wild swing of the markets finally came to a halt after a strong rally in the final session pushed the benchmarks higher. Investor sentiment was boosted by positive durable-goods orders and investors rushed in to buy beaten-down financial stocks. Markets posted their third-straight win and look likely to finally enjoy a positive week after recording four-weeks of decline. However, investors wavered between anticipation and caution as they await Fed Chairman’s speech on Friday at the Jackson Hole.
The Dow Jones Industrial Average (DJIA) moved up 1.3% to close at 11,320.71. The Standard & poor 500 (S&P 500) gained 1.3% to settle at 1,177.60. The tech-laden Nasdaq Composite Index climbed 0.9% and finished the day at 2,467.69. The fear-gauge CBOE Volatility Index (VIX) hovered near 35, and it continues to trade above the key level of 30. On the New York Stock Exchange, the American Stock Exchange and Nasdaq, consolidated volumes were 8.21 billion shares, versus last year's daily average of around 8.47 billion. On the NYSE, for every stock that declined, more than two stocks moved higher.
But for Exxon Mobil Corporation (NYSE:XOM), which dropped 0.2%, all of the 30 Dow components settled in the green. Bank of America Corporation (NYSE:BAC) led the gains for the Dow after soaring 10.9%. This bellwether’s jump comes after the stock was heavily beaten down over the past few days and recently hit a 52-week low. Fears emerged that the bank is in need of raising capital to cover mortgage losses. Raymond James Financial Inc. (NYSE:RJF) maintained its neutral rating on the stock.
Coming to financial stocks, the financial sector itself finished in the green and the S&P financials index (GSPF) advanced 2.8%. Among other bellwethers, JPMorgan Chase & Co. (NYSE:JPM), The Goldman Sachs Group, Inc. (NYSE:GS), Morgan Stanley (NYSE:MS), Wells Fargo & Company (NYSE:WFC) and U.S. Bancorp (NYSE:USB) gained 3.0%, 3.2%, 3.6%, 2.1% and 3.4%, respectively.
Most of the domestic economic reports released off late have highlighted the sorry state of the economy. However, investors were more than happy after encouraging data on durable-goods orders was released by the Commerce Department yesterday. The US Census Bureau announced that new orders for manufactured durable goods increased $7.7 billion or 4.0% to $201.5 billion in July. The report further stated: “This increase, up two of the last three months, followed a 1.3 percent June decrease. Excluding transportation, new orders increased 0.7 percent. Excluding defense, new orders increased 4.8 percent.
Also, gold prices slipped substantively by $104 to $1,757 an ounce, after gold had traded over $1, 900 an ounce for the first time. Subsequently, exchange-traded funds that track gold stocks and gold-mining stocks declined. The drop in the gold futures for December to $1,757 an ounce is the sharpest percentage drop since December 2008.
While the market sentiment was boosted by durable goods data, declining gold prices and the opportunity to buy beaten-down stocks, investors anxiously await Federal Reserve Chairman Ben Bernanke‘s speech at the central bank's annual conference in Jackson Hole, Wyoming on Friday. Investors are hopeful that the bond-buying plan will provide support to the financial markets. It was August last year when Bernanke had actually laid the foundation for the $600 billion bond-buying plan known as the QE2. However, a portion of market watchers are not so hopeful and opined that Bernanke may not hint at any asset-purchase plan on Friday.
Separately, co-founder of Apple Inc. (NASDAQ:AAPL), Steve Jobs, announced he was stepping down from his role as the chief executive of the tech-giant. Jobs, aged 55, has been suffering from health issues and has survived pancreatic cancer. While the shares of the tech-giant gained by a mere 0.7% during the trading day, the stock slid 5.1% after the closing bell. S&P futures lost 3.8 points and it is worth noting that when ranked according to market capitalization, Apple is the second-largest component in the S&P 500.