U.S. Stocks Snap Losing Streakby
U.S. stocks gained for the first time in three days as analyst upgrades of 3M Co. (MMM) and Sprint Nextel Corp. (S) and a rally in commodity producers overshadowed concern debt defaults will spread through the global economy.
3M, maker of 55,000 products, rose 3.4 percent for the biggest gain in the Dow Jones Industrial Average and Sprint surged 5.6 percent after Citigroup Inc. analysts advised buying the shares. AK Steel Holding Corp. (AKS) jumped 6.2 percent, the best advance in the Standard & Poor's 500 Index, on plans to raise prices for carbon steel products by $30 a ton.
"I don't view the economic fundamentals as great, but I do view them as improving," said Dayle Malone, money manager at Old Second Wealth Management in Aurora, Illinois, which oversees about $1 billion. "We've seen a big return in overall confidence in the markets and willingness to take risk."
The S&P 500 added 0.4 percent to 1,095.89 at 4:07 p.m. in New York. The Dow Jones Industrial Average increased 51.08 points, or 0.5 percent, to 10,337.05.
After rising as much as 64 percent from a 12-year low on March 9, the S&P 500 is little changed since mid-October amid concern the economy's recovery from the worst recession in seven decades won't be sustained. Benchmark indexes opened lower today as Standard & Poor's cut the credit outlook for Spain to "negative."
Global stocks slid yesterday as Fitch Ratings cut Greece's credit. The reliability of sovereign credit has come under scrutiny since Nov. 25, when Dubai World, a state-owned holding company, said it would seek a standstill agreement on its debt. The company has since said it's in talks to renegotiate $26 billion of loans.
$12 Trillion Governments globally have spent about $12 trillion to try to halt the first global recession in more than 50 years, widening their budget deficits.
Moody's Investors Service yesterday said the U.S. economy is unlikely to grow enough to substantially narrow a deficit that tripled to a record $1.4 trillion in the fiscal year that ended Sept. 30. The U.S. administration estimated a $1.5 trillion deficit in the current year. Moody's said deficits put strain on the U.S. and U.K. triple-A credit ratings.
"It's perfectly reasonable to consider this a warning shot across the bow of the U.S. triple-A rating, and the impacts both for borrowing costs and the safe-haven status of the U.S. for global investors is a real concern," said James Gaul, a money manager at Boston Advisors LLC in Boston, which manages $1.7 billion.
Treasury Secretary Timothy Geithner told Congress that the Obama administration is extending the $700 billion financial- rescue program until next October, saying the U.S. must hold on to the money in case of new financial shocks.