Stocks staged a nice big rally today.

First, the scoreboard:

  • Dow: 14,930.8, +96.9, +0.6%
  • S&P 500: 1,653.0, +13.3, +0.8%
  • NASDAQ: 3,649.0, +36.4, +1.0%

And now, the top stories:

  • The big story today was U.S. auto sales, which hit an annualized rate of 16.0 million in August, up from 15.7 in July. This was much better than the 15.8 million expected by analysts. This was also the highest level since May 2007. Detroit’s big three automakers each saw 12-14% year-over-year growth. Toyota, Nissan, and Honda all delivered growth about 20%. GM jumped 5% and Ford climbed by 3.5%.
  • The U.S. trade deficit widened to $US39.1 billion in July. “The deficit also widened in real terms; the real merchandise deficit widened by $US3.9B, to $US47.7B,” said UBS’s Kevin Cummins. “In Q2, the real goods balanced averaged $US47.7B, nearly matching the July level. Consequently, net exports if sustained appear generally consistent with about a neutral impact on Q3 GDP.”
  • According to the Federal Reserve’s latest Beige Book of anecdotes, economic growth was “modest to moderate” across the country. “Consumer spending rose in most Districts, reflecting, in part, strong demand for automobiles and housing-related goods,” they said.
  • However, in a worrisome sign, “lending activity weakened a bit.” Financial conditions for consumers and businesses tend to be a leading indicator of jobs and economic activity.
  • Today’s big stock market rally came in the wake of bullish research notes from two of Wall Street’s most influential strategists. Deutsche Bank’s David Bianco raised his year-end S&P 500 target to 1,750 from 1,675 while arguing that all of the autumn uncertainties would prove benign. Morgan Stanley’s Adam Parker unveiled his 12-month target of 1,840, noting that even though earnings growth estimates have come down, stocks tend to move up.
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