Biotech Values

[DewDiligence]

Broad Rally Caps Fourth Consecutive Up Week

http://online.wsj.com/article/SB10001424052748704523604575511423909581314.html

›SEPTEMBER 24, 2010, 5:13 P.M. ET
By DONNA KARDOS YESALAVICH

U.S. stocks rose sharply, ending their fourth-straight positive week on a strong note as signs of stabilization in durable goods and housing boosted investors' appetite for risk.

The Dow Jones Industrial Average advanced 197.84 points, or 1.9%, to 10860.26, its biggest one-day rise since Sept. 1. All 30 of the measure's components rose, led by a 4.6% jump in Caterpillar, a 3.9% climb in Alcoa and a 3.3% increase in Bank of America. The increase in Caterpillar alone accounted for 26 points, or 13%, of the Dow's gain.

The Dow rose 2.4% this week, extending its winning streak to a fourth week. The measure hasn't had such a long weekly positive run since an eight-week advance that ended in April.

In addition, the Dow is up 8.4% for the month, on pace for its biggest September gain since 1939 and the fifth-best September in the Dow's history. The measure is now trading at its highest point since May.

The Nasdaq Composite added 54.14, or 2.3%, to 2381.22. The Standard & Poor's 500-stock index rose 23.84, or 2.1%, to 1148.67, with all sectors in positive territory. The industrial and financial sectors led the gains.

Stocks have sprung back into rally mode, as investors look at revisions to summer data suggesting August's concerns may have been overblown. Also, gold crosses the $1,300 threshold. Donna Kardos Yesalavich, Anna Raff and Paul Vigna discuss.

New-home sales were unchanged from July and the lack of a drop, combined with other readings on housing this week that topped expectations, provided relief to investors who had been fearful of further deterioration. The durable-goods data showed gains in machinery, computers and fabricated-metal products, while a barometer of capital spending by businesses rose.

"That's telling you the industrial activity here in the U.S. is continuing to be strong, we're not falling off a cliff," said Gary Flam, portfolio manager at Bel Air Investment Advisors. "That's been true of a lot of the data we've been getting in September, it's telling us August was a moderation, not a complete reversal of the trend."

Overseas, the market was boosted by an unexpected rise in the Ifo index in Germany, a gauge of business sentiment. That helped ease near-term worries over a possible growth slowdown in Europe's biggest economy.

The euro climbed against the dollar in response, rising to $1.3492. The U.S. Dollar Index, tracking the U.S. currency against a basket of six others, fell 0.9%. Crude-oil futures advanced above $76 a barrel, and gold futures traded at a fresh record high above $1,300 an ounce before settling slightly below that threshold.

The shift toward riskier assets such as stocks and commodities coincided with a move out of the safety of Treasurys, lifting the yield on the 10-year note to 2.61%.

"So many people were moving their money into bonds that it's a natural when you get too much excitement about one asset class the other asset class will start to run," said Barry James, president and portfolio manager at the James Advantage funds. "It can really push the market a good deal."

Among stocks in focus, KB Home gained 3.4%. The home builder's fiscal third-quarter loss narrowed significantly on sharply lower write-downs, while orders declined again following the expiration of a federal tax credit. Deliveries rose, as did the average selling price of a home.‹