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Stocks Surge in Second-Best Day of 2010

http://online.wsj.com/article/SB10001424052748704269204575270003727602386.html

›By PETER A. MCKAY And KRISTINA PETERSON
MAY 27, 2010, 6:01 P.M. ET

Investors embraced risk again throughout the financial markets, pushing stocks to their second-best day of the year and boosting the euro and commodities. Oil had its best one-day gain since last September.

The rally was sparked by a promise by China not to unload European debt and austerity moves in Spain, but was also driven by the perception that the market had overshot and the U.S. economy remains relatively healthy.

"We're having a nice little tug-of-war between some pretty solid economic fundamentals, great corporate fundamentals [in the U.S.] and all these world issues with effects that investors think might spread," said Jeff Layman, chief investment officer at BKD Wealth Advisors. The market's recent volatility has spooked retail investors, in particular, he said.

The Dow Jones Industrial Average snapped a three-day losing streak, surging 284.54 points, or 2.9%, to 10258.99, down 6.8% for May, with one trading day to go. The blue-chip measure recaptured 10000 after it had closed below it Wednesday for the first time since early February.

As May draws to a close, however, there is little consensus on Wall Street that the good times can continue. The month saw the first major 10% correction in the U.S. stock market since a bull run began more than a year ago, and participants are expecting that Europe will need a long stretch of time to recover fully from its recent credit crisis.

The Nasdaq Composite Index rose 3.7% to 2277.68, down 7.5% for May. The Standard & Poor's 500-stock index rose 3.3% to 1103.06, above the 1090 level it struggled to top in the previous session. The broad measure has tumbled 7.1% in May.

Analysts said the rally was also helped along by end-of-month buying, with some money managers looking to grab stocks on the cheap before sending statements to clients.

"A lot of the intensity of end-of-month trading lately has moved to the penultimate day of the month," said strategist Bill King, of M. Ramsey King Securities in Burr Ridge, Ill. "The institutions are frowning a little more on trading on the very last day."

Investors' renewed appetite for risk pushed prices of oil and other raw materials higher.

Crude oil rose $3.04 or 4.25% to $74.55. The Dow Jones-UBS Commodity Index gained 1.9%. The 10-year Treasury note slipped 1-1/32 to yield 3.340%.‹