US Market

US Market: US stocks surged Wed, with the Dow chalking up their best day in more than 2 ½ yrs, as the Fed and five other central banks moved to help banks hit by Europe’s debt crisis. The Blue Chip DJIA shot up 490pts to 12,046 while the broader based S&P500 jumped 52pts to 1,247 and the tech-based Nasdaq soared 105pts to end at 2,620. Vol was very high with 10b shares traded, while advancers thrashed decliners by about 7 to 1 on the NYSE.

US stocks joined a global rally, after the central banks of US, euro, Canada, UK, Japan and Switzerland agreed to cut the cost of providing dollar funding via swap arrangements and agreed to make other currencies available as needed, while China said it would reduce the reserve requirement ratio for banks by 0.5 ppt from Dec 5, marking its first cut since 2008. In the US, positive economic data further contributed to the rally, as Co’s boosted payrolls in Nov by the most this yr and US businesses expanded at the fastest pace in 7 mths.

Financials were the outperformer, rallying 6.6% as a grp, with Goldman Sachs, Morgan Stanley, Citigroup, Jefferies and JP Morgan spiking more than 7%. BofA which hit its 52-wk low onTuesday, also closed up 7.3%. Commodities and materials also outperformed with the S&P materials sector index jumping 5.9%, as oil gained 4.4% to close at $103.50, with Chevron and Exxon Mobile all up at least 4.6%. Caterpillar, the world’s largest construction and mining- equipment maker, rose 8.1%, while US Steel surged 15%. A measure of homebuilders in S&P increased 6.5%, led by PulteGroup who jumped 8% to pace gains in homebuilders.

Among other stocks in focus, Cisco Systems gained 5.4% after Deutsche recommended buying the world’s biggest maker of networking equipment, while Netflix slumped 4.5% as the video- streaming and DVD subscription service was cut to U/p from neutral at Wedbush Securities, citing rising content costs, continued customer losses and concerns about the Co’s growth.

Traders note that yesterday’s global coordinated move was the first since Nov08 and the degree of coordination sends a message to the mkts that global leaders are going to do whatever they need to do to instill confidence in the markets. Add that an indicator called McClellan Oscillator, which measures the moving average of net advancing shares in a market, has moved into a low phase from where a ‘lasting bounce’ may start and continue for several days, which simply means the market is back in tactical bull mode. Meanwhile UBS recommended investors should buy US stocks as an indicator of momentum and breadth, as the S&P 500 has reached oversold levels.