4:25 PM New York – U.S. stocks rebounded and the indexes gained more than 1% and oil surged more than 5% after commodities snapped a 3-day slump. Yahoo and Research in Motion jumped on takeover speculations and financials recovered after a decline of three days.
Hope reigned supreme in New York trading.
The U.S. indexes opened higher following the gains in the European markets. The U.S. private sector employment improved in September according a latest survey from a private company and the service industry expanded in the month.
The index tracked by the Institute for Supply Management showed that the service sector index was 50.3%, a figure above 50 indicates an expansion, and new orders in the industry increased 3.7%.
Two separate government agencies reported factory orders decreased in August and mortgage applications fell in the week ending on September 30.
In earnings news, Acuity Brands fourth quarter net income surged 26% to $34.2 million and Acme Packet estimated third quarter total revenues of $70 million. Costco fourth quarter net income increased 11% to $478 million and Yum Brands third quarter net income increased 7% to $383 million.
European indexes soared more than 4% despite the Italian credit rating downgrade and investors focused on the political and policymakers’ progress in containing the debt contagion in the region. Moody’s cut Italy's government bond ratings by three notches with a negative outlook.
European banks were in focus after Dexia sought another bailout and the governments of France and Belgium struggled to separate the bad assets from the bank. The largest Belgian bank has €21 billion of sovereign bonds of peripheral euro zone nations including €3.4 billion of Greek bonds.
In economic news, Euro-zone retail sales fell in August and composite PMI declined in September. Service sector activity dropped in Germany, Italy and Spain and French private sector contracted in the month.
The UK surged more than 2% and the UK shop price inflation remained flat, job growth slowed, and service sector activity grew in September. UK GDP growth was revised down but business investment rose in the second quarter. Premier Oil agreed to be acquired for £221 million.
Stocks in Japan declined on the global markets worries. Banks and insurers closed lower after Italian debt rating was cut. Electric utilities plunged after Trade Minister Yukio Edano said he is looking to revise rate framework. The yen traded at a record high against the euro.
Stocks in Australia increased after a three-day decline. Retail sales in August increased 0.6% and building approvals rose 11.4%. Trade surplus in the month surged 71% after exports of coal and iron ore rebounded to China, Japan and Korea.
Commodities, Bonds and Currencies
The yield on 10-year U.S. bond closed up to 1.90% and 30-year bond increased to 2.88%.
The U.S. dollar increased to $1.337 to one euro and closed lower against the Japanese yen to 76.75 yen.
Immediate delivery futures of Texas crude oil increased $3.87 to $79.54 a barrel and futures of natural gas decreased 0.07 cents to $3.56 per mbtu and gasoline price increased 7.5 cents to 256.34 cents a gallon.
In metals trading, copper increased 1.40 cents to $3.11 per pound, gold increased $19.80 to $1,635.80 per ounce and silver increased $0.35 to $30.19.