US stocks started the new year with a big jump yesterday as investors looked beyond yet another piece of grim economic data on hopes that a recovery is on the horizon after a disastrous 2008.
Analysts said investors seemed to be discounting economic data, including yesterday's release showing a sharp contraction in factory activity, in anticipation of a turnaround in the second half of 2009.
Those expectations helped push indexes to their highest levels since early November, although volumes were light with trade wedged between Thursday's New Year's holiday and the weekend.
"The market is always discounting where it will be six to nine months out," said Peter Jankovskis, director of research at OakBrook Investments LLC in Lisle, Illinois. "We're getting close to the point if people believe that things are getting better it will be reflected shortly in the market.
The Dow Jones industrial average rose 252.81 points, or 2.88 percent, to 9,029.20. The Standard & Poor's 500 Index jumped 27.83 points, or 3.08 percent, to 931.08. The Nasdaq Composite Index gained 55.18 points, or 3.50 percent, to 1,632.21.
Analysts cautioned the light volume could have exacerbated swings in the market.
Markets shrugged off a report by the Institute for Supply Management that said US factory activity fell to a 28-year low in December, showing a more severe contraction than economists had expected.
Chevron was among the top boosts to the Dow as oil prices rose above US$46 a barrel amid tensions between Russia and Ukraine and violence in the Middle East. Delays in Gulf Coast tankers due to fog also lifted oil prices.
Shares of Chevron rose 3.5 percent to US$76.52, while Exxon Mobil gained 2.3 percent to US$81.64. The S&P Energy index climbed 4.3 percent.
Big-cap tech stocks, including Apple Inc and Microsoft Corp, which are seen as better positioned to withstand a weak economy due to large cash reserves, helped lift the Nasdaq.
Shares of iPod maker Apple rose 6.3 percent to US$90.75 while Microsoft added 4.6 percent to US$20.33.
Consumer discretionary stocks rose after Starwood Hotels signed a confidentiality agreement with property magnate Sam Zell's Equity Group Investments LLC, which could be in preparation for Zell acquiring a larger stake in the company.
Starwood shares surged over 16 percent to US$20.80 while the S&P Consumer Discretionary index gained 4.7 percent.
The S&P Industrials index rose 4.2 percent, as Textron rose 10.8 percent to US$15.37 and Manitowoc gained 9.6 percent to US$9.49.
Analysts also said investors were watching for clues of how President-elect Barack Obama will try to shake the US economy out of its worst slump in decades.
Obama is due to meet leaders in Congress on Monday to discuss his stimulus plan.
Some Republicans are worried that their Democratic rivals could expand the plan to as much as US$1 trillion.
General Motors Corp shares jumped 14 percent to US$3.65 after the US government on Wednesday paid out the first US$4 billion in emergency loans to support the biggest US carmaker. A parallel rescue payment for privately held Chrysler LLC was on hold until the new year.
Chrysler said it remained in talks with the US Treasury to finalize its own US$4 billion loan agreement and expected to receive its share of the funding soon.
Shares of Ford Motor Co rose 7.4 percent to US$2.46 even after it forecast a sharp drop in industry-wide U.S auto sales for December.
Volume was slim on the New York Stock Exchange, where about 929 million shares changed hands, far below last year's estimated daily average of 1.90 billion. On the Nasdaq, about 1.44 billion shares traded, well below last year's daily average of 2.17 billion.
Advancers outnumbered decliners on the New York Stock Exchange by a ratio of about 9 to 2, while on the Nasdaq about eight stocks rose for every three that fell.
(Agencies via Shanghai Daily January 4, 2009)
