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Friday, May 29, 2009

Govt Debt Auction Leads US Stocks Jump

The Dow rose 103.78, or 1.3 percent, to 8,403.80. The S&P 500 index rose 13.77, or 1.5 percent, to 906.83, and the Nasdaq composite index advanced 20.71, or 1.2 percent, to 1,751.79.
The day's gains returned the S&P 500 index to the black for the year after sliding on Wednesday. The Dow is down 4.3 percent in 2009, while the Nasdaq is up 11.1 percent.
The stock market logged its best month in nine years in April, but the advances heading into the final day of trading for May are far more modest. Still, a gain for May would mark the third straight month of rising stock prices.

Trading was choppy in the first half of the day on Thursday, following disappointing news on new home sales and foreclosures, while energy shares drew support from a jump in crude oil prices.
Light, sweet crude rose $1.63 to settle at $65.08 a barrel on the New York Mercantile Exchange, a six-month high. Marathon Oil Corp. jumped $1.77, or 6.1 percent, to $31.01, and Devon Energy Corp. rose $2.02, or 3.4 percent, to $62.31.

New data on the housing market — a key area of concern for investors — wasn't encouraging.
The government said sales of new homes edged up only 0.3 percent in April, less than analysts expected, and a separate report showed that a record 12 percent of mortgage holders were behind on payments or in foreclosure in the first quarter.

Homebuilder stocks fell after the poor housing data came out and on worries that mortgage rates could move higher. Toll Brothers Inc. fell 58 cents, or 3.2 percent, to $17.44, while Beazer Homes USA Inc. fell 18 cents, or 7 percent, to $2.39.

"We still have headwinds ahead, in terms of the housing market going down," said Michael Sheldon, chief market strategist at RDM Financial Group.

Financial stocks also rose. JPMorgan Chase & Co. rose $1.99, or 5.7 percent, to $36.65, while PNC Financial Services Group Inc. rose $2.55, or 6.2 percent, to $43.66.

Investors were also focusing on General Motors Corp., which said a committee of bondholders agreed to a sweetened deal to erase some of GM's unsecured debt in exchange for stock. The agreement may not prevent the automaker from seeking bankruptcy court protection, but investors are eager for any signs that a reorganization would be orderly. GM shares rose 15 cents, or 13 percent, to $1.30.

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