US stocks surged on Thursday, posting their second largest gain this year as fears of eurozone contagion receded and investors flocked back to riskier stocks, lifting shares of technology companies including Intel and Microsoft. American Express also jumped, boosted by an analyst upgrade.
Bolstered by a late surge, the Dow Jones Industrial Average rose 284.54 points (2.85%) to 10,258.99, its second-largest point and percent gain this year. Technology components jumped as a willingness to buy riskier assets returned after reports that China was mulling selling its European bond holdings were dismissed by the Chinese government. Intel rose $1.06 (5.1%) to $21.76, on the Nasdaq.
Microsoft also surged, adding 99 cents (4%) to $26.00, after analysts upgraded the stock to outperform, pointing to a cycle of products that are expected to boost sales as workplaces upgrade their computer systems. The surge helped erase some of Microsoft's earlier losses after its market capitalisation slipped below that of rival Apple.
Financials benefited as fears eased over Europe's debt woes. The Spanish government's approval of budget cuts helped restore confidence that the debt problems could be contained. Bank of America gained 71 cents (4.6%) to $16.18. JP Morgan rose $1.64 (4.2%) to $40.42. American Express jumped $2.16 (5.7%) to $40.33, boosted by an upgrade from a broker, who moved the credit-card issuer to buy from hold, saying the company's affluent customer base is likely more resilient to unemployment.
All three major market measures had their biggest point and percent gains since May 10. The Nasdaq Composite advanced 81.80 points (3.73%) to 2,277.68. The Standard & Poor's 500-share index gained 35.11 (3.29%) to 1,103.06, climbing above the key 1,090 level it struggled to maintain on Wednesday. All of the index's components closed in the black, led by financials and energy stocks.
Boosting the energy sector, crude-oil prices leapt more than 4%, to settle above $74 a barrel, in their biggest one-day dollar and percent gain since September 2009. President Barack Obama said action on 33 exploratory drilling operations in the Gulf of Mexico will be suspended. American depositary shares of BP jumped $2.97 (7.0%) to $45.38 after the US Coast Guard said the company's "top kill" manoeuvre was helping to stabilise the oil spill in the gulf.
Data-storage device maker NetApp jumped $5.74 (18%) to $38.17, after its fiscal fourth-quarter profit more than doubled on strong sales growth and higher margins. Earnings topped analysts' guidance and the company forecast first-quarter earnings above Street estimates.
Luxury jewellery retailer Tiffany climbed $3.27 (7.5%) to $46.86, after its fiscal first-quarter earnings more than doubled, beating analysts' expectations. The company saw a resurgence in its US sales and raised its earning projections for the year.
Agribusiness giant Monsanto slid $2.39 (4.5%) to $50.27, after slashing its full-year earnings expectations by more than a fifth and projecting fiscal third-quarter results below Street expectations. The company also plans to cut prices and reduce the number of varieties of its Roundup weed killer as competition from similar generic products increases.
Discount retailer Costco Wholesale rose $2.76 (4.9%) to $58.74, after its fiscal third-quarter earnings rose by nearly half as sales and membership fees increased. The company's legal costs fell and it benefited from a tax-related gain.
Women's apparel retailer Dress Barn added $1.20 (4.5%) to $27.83, after its fiscal third-quarter earnings more than doubled. Sales were boosted by its new Justice brand, which caters mostly to preteens.
For Australian ADRs listed on the NYSE, BHP Billiton strengthened $4.76 (7.66%) to US$66.93, Rio Tinto Plc gained $3.98 (9.19%) to US$47.31, ResMed improved $2.59 (4.24%) to US$63.73, Telstra Corporation increased 37 cents (3.06%) to US$12.47, Telecom Corporation of NZ rose 18 cents (2.82%) to US$6.57 and Westpac firmed $7.82 (8.69%) to US$97.83.
In economic news, the US economy showed less-robust growth than initially thought in the 1Q due to downward revisions in consumer and business spending, while a drop in weekly jobless claims indicates the labour market recovery remains uneven.
At 7:45 AM (AEST), the 10-year Treasury note yield was 3.36% and the five year yield was 2.19%.
European shares closed sharply higher on Thursday, with miners and insurance companies advancing after China denied it is considering reducing its European government bond holdings.
The Stoxx Europe 600 index climbed 3% to close at 244.79, adding to a 2.4% gain made on Wednesday and bringing the weekly rise for the index to 3.2%.
China State Administration of Foreign Exchange said that media reports that it is considering selling some of its holdings of euro-zone bonds are "groundless." The statement followed a report on Wednesday which said the agency was discussing plans to diversify some of its estimated $630bn in bonds issued by euro-zone member countries. It holds the bonds as part of a $2.4tr forex stockpile.
On the regional level, the German DAX index climbed 3.1% to close at 5,937.14, while the French CAC-40 index ended 3.4% higher at 3,525.31. The UK FTSE 100 index settled at 5,195.17, a gain of 3.1%.
Insurers, which are large holders of European government bonds, were big gainers in Europe, with Axa shares rising 6.4% and Aviva shares jumping 7.1%.
Ageas, the Brussels-based insurer, jumped 14.4% after it said that given continuing "uncertainties in the financial markets," it has further reduced its exposure to Southern Europe in its investment portfolio. At May 21, the insurer's bond exposure to those countries stands at EUR9.1bn, with the largest portion EUR3.8bn of Italian bonds. It's taking a EUR55m to EUR65m charge on the move.
Prudential jumped 6.8% following reports that as many as 20% of the UK insurer's shareholders are ready to oppose its $35.5bn takeover of American International Group's Asian business.
Oil giant BP climbed 5.9%. The oil giant began its "top kill" of its leaking Gulf of Mexico oil well on Wednesday.
Rio Tinto shares climbed 4%, BHP Billiton shares rose 4.4% and Xstrata gained 4%.
Asian markets erased early session losses to end higher as bargain-hunters scooped up recently battered shares ranging from Australian miners to Chinese banks and South Korean technology stocks.
The advance came despite a weak finish on Wall Street and against a backdrop of the euro's advance against major currencies, which has come to symbolise investor risk appetite of late.
Japan's Nikkei Stock Average rose 1.2% to 9,639.72, China's Shanghai Composite added 1.2% and Hong Kong's Hang Seng rallied 1.2%.
New Zealand shares recovered from a near 10-month low to end higher as firmer markets around the region encouraged late buying in blue chips. The NZX-50 Index ended up 0.8%, or 23.65 points, at 3,034.83 after touching a session low of 2,989.44. The index fell below 3,000 for the first time since July 30, 2009.
A strong recovery in the euro and rallying equity markets propelled base metals higher on the London Metal Exchange. Aluminium rose $30 (1.48%) to $2,055 while copper firmed $140 (2.05%) to $6,970 and nickel added $335 (1.57%) to $21,660. Zinc strengthened $35 (1.84%) to $1,935 and lead gained $65 (3.67%) to $1,835. Comex copper was last quoted at 317.05 US cents per pound.
Gold futures edged lower as fear-buying slowed to a trickle, but most investors weren't ready to embrace a rosy outlook. Spot gold was last quoted at $1,210. Comex gold futures climbed $1.00 (0.08%) to $1,214.40. Spot silver was last quoted at $18.45.
Crude shot to a two-week high, riding an investor wave back into riskier markets after China expressed confidence in European bonds. West Texas Intermediate was last quoted at US$74.55 per barrel.
At 07:45 a.m. (AET) the US dollar was quoted at 0.8100 euros, 91.03 yen, 1.176 AUD and 68.62 pence.