STOCKS SURGE, DOW JUMPS 400: Here's what you need to know

Stocks staged a strong comeback, erasing the sharp losses from Friday’s sell off after the jobs report. All 30 Dow stocks closed higher, and every S&P 500 sector finished in the green to start the four-day trading week. The S&P 500 also saw its strongest performance since last Monday.

First, the scoreboard:

  • Dow: 16,451.30, +348.92, (2.17%)
  • S&P 500: 1,963.27, +42.05, (2.19%)
  • Nasdaq: 4,794.69, +110.77, (2.36%)

And now, the top stories on Tuesday:

  1. It was one of those quieter days. There were no major US economic data releases. We did, however, get the Fed’s updated Labour Market Conditions Index, derived from several indicators, which rose to a seven-month high of 2.1. And, the NFIB Small Business Optimism Index rose a half point to 95.9 last month. Note that the NFIB data were gathered before the big sell off.
  2. Warren Buffett told CNBC he bought some more IBM shares in the third quarter. As of June 30, the Berkshire Hathaway CEO owned a more than 8% stake. He also said Berkshire’s acquisition of a German motorcycle fashion retailer was an advertisement to markets that he is interested in buying more businesses abroad. Buffett was in New York today for his annual lunch with the lucky winner of the GLIDE Foundation’s charity auction.
  3. There was some M&A news. Media General is buying Meredith Corp. in a $US2.4 billion cash-and-stock deal. The combined company would own publications including Shape magazine and And, shares of Teco Energy spiked 24%, the most on the S&P 500, after news yesterday that Canadian energy company Emera is acquiring the firm for $US10.4 billion in an all-cash deal.
  4. The New York Times editorial board thinks the Federal Reserve should not raise rates yet. Here’s their thinking, published yesterday: “Policy makers should be focused on strategies to raise wages, but the opposite appears to be happening. Just as Congress enfeebled the economy by switching too soon from stimulus spending to budget cuts, Federal Reserve officials have all but vowed to begin raising interest rates this year. That move reflects a belief that the economy is returning to “normal,” but it would be premature, because today’s norm is an economy that is incapable of generating and sustaining broad prosperity.”

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