Thursday, May 07, 2009

U.S. Stocks Rise to Four-Month High as Banks Jump on Tests


U.S. stocks advanced to a four-month high as investors speculated banks don’t need as much capital as had been projected and a report showed employers cut fewer jobs than economists estimated.

Citigroup Inc. surged 17 percent as people familiar with the matter said the lender needs only about $5 billion. Zions Bancorporation, the Salt Lake City-based bank, jumped 26 percent on expectations it will be able to raise capital, while Lincoln National Corp. rallied 33 percent on earnings that topped estimates. The gains also came after ADP Employer Services said companies eliminated 491,000 jobs in April, 154,000 fewer than the average economist estimate in a Bloomberg survey.

“I’m truly impressed that the market has held up, led by financials,” said Keith Wirtz, who helps oversee $20 billion as chief investment officer at Fifth Third Asset Management in Cincinnati. “There was so much noise surrounding the stress tests. Maybe people are starting to feel enough confidence that we’ll put this behind us and the world will continue.”

The Standard & Poor’s 500 Index added 1.7 percent to 919.53 at 4:08 p.m. in New York, its highest close since Jan. 6. The Dow Jones Industrial Average rose 101.63 points, or 1.2 percent, to 8,512.28. Europe’s Dow Jones Stoxx 600 Index climbed 1.4 percent, while the MSCI Asia Pacific Index rose 0.5 percent. Almost two stocks gained for each that fell on the New York Stock Exchange.

Stock-index futures fell before the open of exchanges on concern over how much capital banks would need to raise following the stress tests. People familiar with the matter said last night that Bank of America Corp. needs about $34 billion. Futures reversed declines as the ADP data eased concern rising unemployment will trigger more credit losses.

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