Stocks made broad gains Wednesday as Treasuries surged after Dallas Federal Reserve President Richard Fisher suggested that the Fed's tightening cycle is close to an end. Soaring oil futures led to some profit-taking, but the market finished on a high note as investors prepared for Friday's critical jobs report, according to Standard & Poor's MarketScope.
On Wednesday, the Dow Jones industrial average gained 81.58 points, or 0.78%, to 10,549.06. The broader Standard & Poor's 500 index was up 10.72 points, or 0.90%, to 1,202.22. The tech-heavy Nasdaq composite index gained 19.64 points, or 0.95%, to 2,087.86.
Trading on the New York Stock Exchange ended four minutes early Wednesday, because of a communication problem with the Securities Industry Automation Corp, the company that processes trades for the exchanges.
Looking ahead to Thursday's economic calendar, figures on on first-quarter productivity, weekly initial jobless claims, and April factory orders are due to be released. The most closely watched report of the week, however, will be the May employment figures coming out Friday.
In Wednesday's economic news, the Institute for Supply Management's manufacturing index fell to 51.4 in May from 53.3 in April, which is slightly weaker than the 52.3 to 53.3 reading that analysts were expecting. U.S. construction spending rose 0.5% to a record high in April, after a 0.6% increase in March, according to a Commerce Department report. The figure was slightly lower than the 0.6% increase expected.
July crude oil futures ended the day up $2.63 to $54.60 a barrel on massive fund buying and problems at two Texas refineries, according to Standard & Poor's MarketScope. The Energy Department's weekly report on stocks is due to come out Thursday, a day later than usual, because of the Memorial Day holiday.
In business news Wednesday, Securities and Exchange Commission Chairman William Donaldson, who has earned a reputation as an aggressive regulator, announced he was stepping down from his post after two and a half years leading the agency.
The Wall Street Journal reported that SBC Communications (SBC), the second largest U.S. phone company, plans to start charging $14.95 a month for high-speed Internet access, less than some dial-up plans.
Telecom equipment maker Nortel Networks (NT) posted a first-quarter loss, despite higher revenue for the period, partly because of a charge related to the company's restructuring. The company lost $49 million in the quarter, compared to earnings of $59 million a year ago.
Internet search company Google (GOOG) gained 3.6%, after Credit Suisse First Boston raised its target on the company's stock to $350 from $275.
The U.S. National Highway Transportation Safety Administration said Wednesday that it is investigating Toyota's (TM) popular gas-electic Prius hybrid car, after receiving reports that the engine stalls without warning.
Major automakers were also reporting May sales Wednesday. Both General Motors (GM) and Ford (F) posted declines, led by falls in truck sales. GM's sales fell 1.6% overall, with truck sales dropping 7.8% for the month. Ford's sales fell nearly 3% overall, with truck sales falling 6.4%. Sales of Ford's Mustang coupe, however, were up 47%.
Treasuries finished higher in price Wednesday, following Dallas Fed President Fisher's remarks that the Fed's tightening cycle was in the "eighth inning.", according to Standard & Poor's MarketScope. The yield on the benchmark 10-year note fell to a 14-month low of 3.89%.
European stock markets closed higher on Wednesday. London's FTSE 100 index gained 47 points, or 0.95%, to 5,011.00, even though Britain's May purchasing managers index dropped to 47.3 from 49.1 in April. Shell Transport, Cairn Energy and BP were gainers as oil futures rose.
Germany's DAX index added 66.54 points, or 1.49%, to 4,527.17, even though the eurozone's May purchasing managers' index fell to a 22-month low of 48.7. BMW and DaimlerChrysler were higher as a weaker euro was expected to lift sales.
In Paris, the CAC 40 index, gained 57.52 points, or 1.40%, to 4,178.25 on short covering. Airbus parent EADS was lower as Singapore Airlines and Qantas sought compensation for a six-month delay in delivery of the new A380 plane.
Asian markets closed higher Tuesday. In Japan, the Nikkei 225 index ended a five day winning streak to close up 53.08 points, or 0.47%, to 11,329.67. Automakers Toyota and Honda rose on domestic auto sales. Mitsubishi also soared 7.4% on its first year-over-year rise in monthly car sales in almost 18 months, and its announcement that its Indian partner Hindustan Motors has agreed to expand production of Mitsubishi's Lancer sedans beginning in January.
In Hong Kong, the Hang Seng index climbed 6 points, or 0.04%, to 13,873.07 on gains in Hutchison Whampoa and Chinese telecoms.