Wall Street managed to open higher today as investors took advantage of lower prices following yesterday’s sell-off and positive US housing data.
By 4pm (London time) the Dow Jones industrial average was up 45.95 points to 10,069.
Wayne Kaufman, chief market strategist at John Thomas Financial commented that 'we had a huge down day yesterday on lighter than average volume as we neared technical levels like Dow 10,000, so it's natural to expect a bounce today.' [1]
Sentiment in the US was helped after the National Association of Realtors revealed that pending sales of existing US homes rose 6% from March, beating expectations and coming in 25% up on this time last year.
There is concern, however, that this figure will have been inflated by a rush to sign contracts before the end-of-April withdrawal of a tax credit for first-time buyers, and there is widespread expectation that May could see a significant reversal.
Following the report, gains on US indices were sustained, with Hewlett Packard leading the pack, adding 2.63% on the back of news that it would be shedding around 9000 jobs. Investors took this as an indication that the company’s move towards further automation of services will stand it in good stead for the future.
Elsewhere, the financial sector fared well thanks to a UBS ratings upgrade for JPMorgan from ‘neutral’ to ‘buy’. The financial services firm added 1.6%, while Alcoa (+1.3%) and American Express (+1.5%) also benefited. In turn, JPMorgan kept its ‘overweight’ rating on BP, despite the energy giant’s recent high-profile troubles and plummeting stock.
JPMorgan was not so kind, however, to the UK banking sector. They downgraded both Lloyds and RBS and sent them tumbling to the bottom of the UK’s blue-chip index along with Barclays, who also suffered from concerns over its cash offer of £98m for Swedish company Tricorona.
Some of the positive sentiment from the US did manage to make it across the Atlantic, and heading into the close the FTSE managed to pare some of its earlier losses, rising above the 5140 level but still down around 35 points on the day.
Source: [1] Reuters (2 June 2010)
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'Spread Betting News 2 Jun 2010', Article by IG Index, last update: 2-Jun-10
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