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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Stocks close at day's highs, thanks to China

UPDATED at 9:20 p.m. to fix Dow closing figure:

Stocks sprinted through the finish this afternoon, hitting their highs of the day in the last 30 minutes, as a muscular day-long rally closed out strongly. It was the best day for stocks in 10 months.

Financials and energy stocks led today's rally. BP, which is still trying to stop what is now the biggest oil spill in history, closed up 6.9 percent.

The rally began and was carried through the day by China's reaffirmed confidence in the European debt it holds, as the country shot down a rumor reported in the Financial Times that it was looking to dump its Euro debt.

The Dow soared 2.9 percent to close at 10,258.99. Amazingly, today's rally was so strong that it turned a terrible week positive. All but one of the Dow's 30 stocks gained today. Pharma firm Johnson and Johnson was the only loser.

The broader S&P 500 closed up 3.3 percent at 1,103.06.

The tech-heavy Nasdaq closed up 3.7 percent at 2,277.68.

The major indexes are still down between 7 and 8 percent for May, which has only two trading days left.

The dollar index dropped 1 percent, as it typically moves in opposite direction to stocks. The euro moved higher against the dollar.

Oil settled at its highest level in two weeks, at more than $74 per barrel.

Stocks retesting highs in afternoon

1:47 p.m.: Stocks are re-testing their highs for the day as the strong rally continues, thanks to China's backing of its European debt holdings.

The Dow is touching 10,200 and is up 2 percent.

The broader S&P 500 is up 2.4 percent.

The tech-heavy Nasdaq is up 2.9 percent.

President Obama is holding a news conference right now -- his first since last summer -- and it's being dominated by questions on the oil spill in the Gulf. Shares of energy companies -- such as ExxonMobil, ConocoPhillips and even BP, which is at this moment dumping mud and other refuse onto the oil spill in an attempt to cap it -- are up with the market.

The euro is trading up against the dollar, but is still low, selling at about $1.24.

Crude is up with the rally, as oil is selling for more than $74 per barrel.

Stocks extend rally at mid-day

11:22 a.m.: The stock rally is growing more muscular as the trading day continues, thanks to China's backing of Europe and a slight drop in new U.S. unemployment claims filed last week.

The Dow has climbed well back above the 10,000 mark, and is up 1.9 percent.

The broader S&P 500 is up 2.2 percent.

The tech-heavy Nasdaq is up 2.6 percent.

The rally has popped the price of oil, and crude is up sharply to $74 per barrel. Gold is trading higher, as well, and is back above $1,200 per ounce.

Stocks surge at opening

10:09 a.m.: Stocks are surging in early trading today, as China shot down rumors that it is considering dumping European debt.

In the first 45 minutes of trading, the Dow is up 1.7 percent.

The broader S&P 500 is up 2 percent.

The tech-heavy Nasdaq is up 2.3 percent.

The Financial Times reported that China was considering selling its European debt holdings because of the Continent's ongoing debt worries. If true, this would be a major blow to Europe and the euro, and even the rumor of it sparked big sell-offs in European and U.S. stocks.

But today, the agency that manages China's $2.5 trillion in foreign reserves said, no, the authoritarian state is keeping its European debt. That news cheered European markets, which are up 2 percent in Germany, England and France. It also goosed the euro, which is trading up against the dollar.

"Europe has been, and will be one of the major markets for investing China's exchange reserves," said SAFE, the State Administration of Foreign Exchange in China. "We believe that with the joint efforts of the international community, the euro zone will be able to overcome its difficulties and maintain the steady and healthy development of European financial markets."

By Frank Ahrens  |  May 27, 2010; 9:20 PM ET
Categories:  Wall Street  
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Comments

Isn't the 3.2% figure at the top of the blog "1st quarter GDP" (in 2010) not "4th"?


Posted by: Hopeful9 | May 27, 2010 10:37 AM | Report abuse

It's interesting that we have to DEPEND on good news from China for America's security.
This is all from liberal spending crap, no matter who does it.

Posted by: jblast2000 | May 27, 2010 11:11 AM | Report abuse

China speaks a positive word and world markets rise. Should China decide to cause world financial chaos for their own benefit, they could do it with one press conference. How sad.

Posted by: IdahoSpud1 | May 27, 2010 11:17 AM | Report abuse

Actually, why should China tell the world that they are selling their European debt? To tell the world such would cause a major decline in their holdings which is likely something they want to avoid. If the Chinese were prudent, which they probably are, they probably want to get the maximum value for their investments into foreign national debt. So, why would they tell the rest of the world that they are selling? Hmmm! Do investors really want to believe what China is telling them?

Posted by: ceo1 | May 27, 2010 11:26 AM | Report abuse

China sold off most of its US Treasuries a while ago. Very quitely, but reported in the WSJ. Why would it keep Euro debt?

Posted by: clairevb | May 27, 2010 11:48 AM | Report abuse

I completely agree with ceo1. China's foreign reserve composition in the past few years has changed and has stocked up a lot of euro in its vault. To see that the euro is declining drastically means they are losing money left and right. So now, the Chinese gov't want to prop up the euro and sell them slowly (I believe). Maybe should we expect China Central Bank to ease the fixed exchange rate? Besides, a weak euro is doing China no good. Cheap euro means that european goods are cheaper and export for Chinese companies would be difficult. Moreover, Germany is not going to let the euro fall too low or else their high tech export industry is going to suffer.I do want to congratulate Chancellor Merkel's tough stance. Her resistance to put a rescue bailout package signals that all eurozone gov't should watch their back. Don't over spend! The age of high debt is over!
On the other hand, it is not only to say that US, UK and euro needs to tightening its belt, China also needs to tightening its belt on debt. Although China's central gov't is not owing a lot of foreign debt but it is owing a lot of domestic debt to its local provinces.

I wonder when will the Chinese leadership say it is time for the yuan to reevaluate and eventually becomes floating regime. It is doing China no good to prop up other currency in the long run and also fixed exchange rate could be a burden to its central bank in the long run.

Posted by: hopefulgrace | May 27, 2010 11:48 AM | Report abuse

Never underestimate Germany! After 50 years from the end of WWII, Germany has recovered and is stronger than ever. Militarily Germany was at the top of its game in WWII with the exception of the MIGHTLY US POWER (and still is). Now Germany is in economic control of Europe.

Posted by: hopefulgrace | May 27, 2010 11:57 AM | Report abuse

jblast2000 says that the fact that america's financial security, such as that is, depends upon china due to liberals spending. now i'm not a myopic partisan and see nothing much changed at all with obama. but... there's either a lack of knowledge of recent history very short memory saying that.

the 'conservative' gw bush took office with the lowest national debt since 1980. then bush tripled it. it was $4.2 trillion in 2001 and$12.3 trillion when he left office in 2009. he did this by giving the richest americans a huge 10 year tax cut that gave them $12.2 trillion over these years (and obama has expanded and continued those tax cuts for the comfortable, as if that would create jobs...)

then bush spent trillions we didn't have on war crimes and torture chambers. then bush started the massive giveaway of trilions more dollars we don't have to bailout the exact criminals who schemed this global economic disaster. GAO says that though these payments were largely obscured by having been done via various agencies, the total price tag of bush and obama's outlays to the wall street criminals was some $12 trillion. was all that waste 'liberal' or 'conservative'? well, ask bush.

i take it the fed just printed it up from air. again, obama just continued in the footsteps of bush on this. and it was a republican congress throughout the bush reign, right? bush and his GOP congress cut social programs in every quarter while drastically increasing spending on their pets like military, police, surveillance while short-shrifting new orleans after katrina and watching while the numbers of the unemployed, the dispossessed and impoverished soared.

and who did 'conservative' bush go to to underwrite his unprecedented credit binge? bush went to his buddies in teh communist party of china who lent $3 trillion to the US government; ironically making the communist party the largest creditor of american capitalism. so get your facts straight...

Posted by: tazdelaney | May 27, 2010 12:05 PM | Report abuse

tazdelaney

Bush and Republicans were kicked out by conservatives for spending like liberal Democrats. But Obama has turned that into pocket change now.

BTW,

And if you want to compliment Clinton then you have to give kudos to the Republican Congress under Gingrich which was in place for 3/4 of Clinton's administration and of course you know that's where laws are made and budgets set. They were both helped by the huge dot com business, the Republican capital gain tax reduction and the Republican welfare reform that Clinton did sign after 3 attempts. Money flowed everywhere including revenues to the governmet. And then, the Dot Com business Collapsed Big time. And Clinton handed Bush a collapsing stock market and a recession.
Bush took over during an economic down turn triggered by the collapsing stock market because of the Dot com businesses going south. Coupled with 9/11 the economy was in some trouble. President Bush did and excellent job of recovery and yes the tax cuts did help. We've had years of low unemployment, low inflation, great stock market in spite of the liberal media trying to talk it down throughout his administration.
And then the Toxic Assets hit from bad the Democrat controlled FNMA and bad policy from Democrats and Moderates that wanted to put people in homes that couldn’t afford it. And the energy crisis form primarily Democrats blocking all practical energy production and just standing by and watching as gas prices quadrupled.

Posted by: jblast2000 | May 27, 2010 12:21 PM | Report abuse

As US and EU move towards socialism, China moves towards capitalism. It looks like China has replaced the US to become the new financial super power!

Posted by: OpenMind3 | May 27, 2010 12:35 PM | Report abuse

The rally has little to do with China and lots to do with Spain.

A few hours ago, the Spain's Parliament voted a package of dramatic austerity measures proposed by President José Luis Rodríguez Zapatero. The package contains severe budget cuts across the board, aimed at reducing the deficit: cuts in bureaucrats' salaries; cuts in social security cheks and health care services; cuts in infrastructure construction, and so on.

This package was imposed by the EU and the IMF as a requirement for Spain to receive huge loans (some 400,000 billion euros). Without that money, the Spanish economy would collapse this year.

The problem in the previous days was clear: Zapataro faced tough oposition. His Socialist party doesn't have a legistative majority, so he needed help from many small parties to pass the bill. Many people -pundits, economists, AND THE MARKETS- believed the bill would not pass. That would have meant Spain would not receive those EU and IMF loans. Default on existing debts, and an absolute economic collapse, were in the horizon.

In the end, the bill passed BY ONE VOTE. European markets rallied on the news. Wall Street began to breath again.

Posted by: tropicalfolk | May 27, 2010 12:49 PM | Report abuse

Of course they won't sell it they now own almost all the world next forclose on it.

They don't want war!

Posted by: antonio3 | May 27, 2010 2:24 PM | Report abuse

The Chinese Communist Party(CCP) is not famous for doing the right thing. The CCP practices slavery, torture and even organ harvesting on its own people and the World's Governments still continue to do business with them because of corporate greed.
The U.S. House of Representatives passed a resolution Tuesday, Mar.16, 2010, urging the Chinese Communist Party to end its decade-long campaign against Falun Gong and expressing solidarity with victims of persecution in China.

House Resolution 605 recognizes, “the continued persecution of Falun Gong practitioners in China on the 11th anniversary of the Chinese Communist Party campaign to suppress the Falun Gong spiritual movement and calling for an immediate end to the campaign to persecute, intimidate, imprison, and torture Falun Gong practitioners.” “The Falun Gong spiritual discipline is based on truthfulness, compassion, and tolerance,” said Ros-Lehtinen. “Yet these innocents are brutally targeted by the Chinese regime. The stark reality which this resolution addresses gives new meaning to the phrase 'Butchers of Beijing.
Like the great American poet and songwriter Bob Dylan once said, " Money doesn't talk, it swears."
Thank you for your consideration.

Posted by: jefforsythe9 | May 27, 2010 2:40 PM | Report abuse

Obama suspends oil drilling at 32 sites in the Gulf due to fear of more oil spill disasters. How will his decision impact the “buying and selling” and price of shares of ExxonMobil, ConocoPhillips and BP?

The price of oil and crude is up sharply to $74 per barrel. Does this mean foreign oil companies in the Middle East will profit from U.S. shut downs and oil losses spilling into the ocean unrestrained?

Posted by: klausdmk | May 27, 2010 3:29 PM | Report abuse

It is amazing that there is hardly any bad news regarding China's economy. Europe's exuberance would be tempered if they got a copy of Times magazine dated April 5th, 2010. It covers China's impending real estate bubble. The article is backed up with pictures of vast developments bereft of any humans. Developments that go as far as the horizon are unoccupied and qualifies as "white elephants" and bad Chinese decisions. This eye opening article starkly presents the Chinese economic crisis that the media in general avoids to cover. If anyone wants to know how vulnerable China's economy could be please read the article in Times magazine dated April 5, 2010.

Posted by: rsbnola | May 27, 2010 3:55 PM | Report abuse

NOW CRIMINAL "OPEC- OIL is $rising in $Price!! Here WE go again having to deal with these Globalist Criminal OILsters & $BANKsters!! -- When will the U.S CONGRESS do as they are told,- and obey WE-the-People?! -- Get Rid of Criminal "OPEC" OIL NOW!!! -- WE Citizens have had IT - PERUIOD!! -- CONGRESS has become a bunch of 'Turn-Coat' THUGS!! --- gASOLINE $pRICES NEED TO BE BELOW $2.00 PER GALLON!!! -- The U.S SENATE is full of OPEC TRAITORS!!!

Posted by: jward52 | May 27, 2010 4:20 PM | Report abuse

It was up 404 points a few weeks ago. Today, like then is a bear market rally.

S&P heded to 850.

Posted by: knight1977 | May 27, 2010 5:04 PM | Report abuse


Dow Jones average finished higher on sharply lower volume which means the smart money is on the sidelines.

Do not expect the WaPo hack "financial writers" to tell you this however.

Posted by: screwjob15 | May 27, 2010 5:59 PM | Report abuse

I'm parking my 401k in Treasury bonds for the next six months... screw the stocks...

Posted by: demtse | May 27, 2010 7:58 PM | Report abuse

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