WSJ: US Stocks Climb Early, As Dollar Weakens After Rate Hikes
By Kristina Peterson
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--U.S. stocks climbed on Tuesday, boosted by a weaker dollar after a pair of global rate hikes and voters headed to the polls in midterm elections expected to usher in a wave of Republican politicians.
The Dow Jones Industrial Average gained 86 points, or 0.8% to 11210. All but two of its 30 components were positive, led by a 1.4% rise in Kraft Foods. Home Depot was also strong, up 1.3%.
The Nasdaq Composite rose 0.9% to 2528. The Standard & Poor's 500-share index climbed 0.8% to 1194.
After a frenzied fall of anticipation, market watchers were hopeful Tuesday as Americans began to cast their votes in elections that are likely to see a sharp swing to the Republicans, often perceived by investors as more business-friendly. Meanwhile, the central bank's policy-setting committee will begin its two-day meeting on Tuesday. A further round of quantitative easing, dubbed QE II, is widely expected to be announced on Wednesday.
Expectations for the bond-purchasing program have driven the markets steadily higher since early September. Some traders are now concerned the market's long rally may be due for a downturn if the scope or size of any Fed stimulus disappoints eager investors. Further central bank action is also likely to continue to put pressure on the U.S. dollar.
The U.S. Dollar Index, which tracks the U.S. currency against a basket of others, slid 0.7%. The Australian dollar soared close to parity against the U.S. dollar after the Reserve Bank of Australia surprised financial markets when it tightened policy for the first time in six months. India also raised interest rates Tuesday in a bid to fight inflationary pressure.
The euro gained strength, trading recently at $1.4026, helped by a rise in the latest euro-zone purchasing-managers' index.
Among stocks in focus, U.S.-listed shares of oil giant BP rose 1.3%. The group reported a 67% drop in third-quarter net profit due to another $7.7 billion of charges related to the Gulf of Mexico oil spill. Adjusted underlying profit, however, beat consensus forecasts.
Pfizer rose 0.6%, even after its third-quarter earnings fell 70%, but adjusted profit rose and beat analysts' estimates, as the company booked $1.47 billion of write-downs and $701 million of legal charges related to asbestos litigation. However, sales of the company's flagship Lipitor and Celebrex, which treat high cholesterol and arthritis, respectively, fell from a year earlier.
Art Technology Group a maker of e-commerce software, soared 46% after business-software giant Oracle agreed to pay about $1 billion for the company, or $6 a share, a 46% premium to Monday's closing price. Shares of Oracle rose 1.1%.
Demand for U.S. Treasurys was mixed. The two-year note was flat, while the 10-year note edged higher, pushing its yield down to 2.60%. Crude-oil prices climbed close to $84 a barrel, while gold futures also advanced.
-By Kristina Peterson, Dow Jones Newswires; 212-416-2917; kristina.peterson@dowjones.com
