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Optimism about economic rebound grows, investors extend stock market's latest rally
By SARA LEPRO
AP Business Writer
(AP) 11:54:41 AM (ET), Monday, August 24, 2009 (NEW YORK)
Investors are showing optimism about an economic recovery and extending the stock market's latest rally.

Major stock indicators are up more than 0.5 percent at midday, following big gains in overseas markets. Oil and other commodities are higher, while Treasury prices are rising ahead of the government's latest round of auctions.

Investors have been encouraged by Federal Reserve Chairman Ben Bernanke's declaration Friday that the economy is on the verge of recovery. However, reports this week on consumer confidence and housing could test the market's upbeat mood.

The Dow Jones industrials are up 63 at 9,569, following a 155-point increase on Friday. The Standard & Poor's 500 index is up 7 at 1,033, while the Nasdaq composite index is up 10 at 2,031.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

NEW YORK (AP) _ Investors held on to their optimism about an economic recovery and extended the stock market's latest rally.

All the major stock indicators rose nearly 1 percent Monday, including the Dow Jones industrials, which added about 80 points. The advance followed big gains in overseas markets. Oil and other commodities rose, while Treasury prices were mixed ahead of the government's latest round of auctions. The biggest gainers in stocks were financial, energy and technology companies _ all industries that depend heavily on a healthy economy for growth.

"The market just doesn't want to go down," said Ryan Detrick, chief technical strategist, Schaeffer's Investment Research.

Investors are still feeling encouraged by Federal Reserve Chairman Ben Bernanke's declaration Friday that the economy is on the verge of recovery. However, while there are no major economic reports scheduled for Monday, traders' upbeat mood could be tested by reports this week on consumer confidence and housing.

There have already been signs of recovery in the housing market. The latest came Friday, when the National Association of Realtors reported a bigger-than-expected jump in home sales in July. It was the fourth straight monthly increase and the highest level of sales since August 2007.

But consumers are still struggling, and that is problematic for the economy, as Americans' spending accounts for more than two-thirds of all economic activity. Analysts warn that a disappointing report on consumers could easily upset the market's recent gains. The Standard & Poor's 500 index is up 52 percent since early March.

"After a 50 percent bounce, you better see some positive signs," Detrick said. "The economy has to validate what the stock market has done. We better see that or the stock market will be in trouble."

On Tuesday, the Conference Board releases its monthly consumer confidence index. Reuters and the University of Michigan report their final consumer sentiment figures for August on Friday.

In early trading, the Dow Jones industrial average rose 79.96, or 0.8 percent, to 9,585.92. The Standard & Poor's 500 index rose 9.37, or 0.9 percent, to 1,035.50, while the Nasdaq composite index rose 14.65, or 0.7 percent, to 2,035.55.

On Friday, the Dow shot up 155 points, closing above 9,500 for the first time since Nov. 4, and all the big indexes finished with gains of more than 1.5 percent to close at their highest levels of the year.

About three stocks rose for every one that fell Monday on the New York Stock Exchange where volume came to a light 375.9 million shares.

In other trading, the Russell 2000 index of smaller companies rose 3.83, or 0.7 percent, to 585.34.

Bond prices were mixed Monday as investors prepared for a round of auctions this week totaling $197 billion. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.58 percent from 3.57 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, fell to 0.15 percent from 0.16 percent.

Stocks got a push early on from the gains in overseas markets. Japan's Nikkei stock average surged 3.4 percent, while China's main index was up for a third straight day, gaining 1.1 percent. Sharp falls in the index last week triggered selling around the world.

In afternoon trading, Britain's FTSE 100 rose 0.9 percent, Germany's DAX index gained 1.1 percent, and France's CAC-40 rose 1.2 percent.

Among technology stocks, Advanced Micro Devices Inc. jumped 10 percent, adding 37 cents to $4.07 after a Citigroup analyst upgraded the stock to a "Buy" rating, saying he sees opportunity for the company to increase its market share.

Shares of Citigroup Inc. and Bank of America Corp. posted some of the biggest gains among banks. Citigroup rose 28 cents, or 6 percent, to $4.98, while Bank of America rose 62 cents, or 3.6 percent, to $18.08.

Oil prices rose 79 cents to $74.68 a barrel on the New York Mercantile Exchange.

The dollar mostly rose against other major currencies, while gold prices rose.


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* Welcoming news despite a low consumer spending.
Understandably the caution flag is still out. *

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