5 May 2009

US markets up

9:42 am on 5 May 2009

Stocks in the United States rallied on Monday, driving the S&P 500 into positive territory for the year as housing data fueled hopes the recession is easing.

Pending sales of existing homes rose unexpectedly in March, sending shares of home builders higher.

Lennar jumped 9.3% to $US10.34, while Toll Brothers gained 6.5% to $US20.73, and D.R. Horton added 9.1% to $US13.49.

Bank stocks rose: Citigroup was up 7.7% at $US3.20 and Bank of America climbed 19.3% to $US10.38. Wells Fargo was up 23.7% to $US24.25, while JPMorgan rose 10.2% to $US35.79.

Final stress test results are now expected to be issued on Thursday. Investors are betting they will show banks do not need a larger financial cushion. That would avoid a bigger government stake in the banks.

Bloomberg reported on Monday that Citigroup is looking to raise any additional capital it might need from private investors rather than giving more control to the government.

The Financial Times reported that Bank of America Corp is working on plans to raise more than $US10 billion in fresh capital, but the bank denied it had such plans.

The Dow Jones industrial average rose 214.33 points, or 2.61%, to 8,426.74.

Standard & Poor's 500 Index gained 29.72 points, or 3.39%, to 907.24. The Nasdaq Composite Index climbed 44.36 points, or 2.58%, to 1,763.56.

The S&P 500 is now 34% above from a 12-year closing low on 9 March. However, it is still 42% below its record high in October 2007.

Trading was active on the New York Stock Exchange, with about 1.71 billion shares changing hands - above last year's estimated daily average volume of 1.49 billion. About 2.56 billion shares were traded on the Nasdaq.