Stocks jump on G-20 stimulus

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Published: November 9,2009

Nov. 9 (Bloomberg) — U.S. stocks extended a global rally and the dollar slid after the Group of 20 nations agreed to maintain economic stimulus efforts. Commodities climbed, sending gold to a record above $1,100 an ounce.

American Express Co., Bank of America Corp. and Caterpillar Inc. gained at least 4 percent to lead the Dow Jones Industrial Average to a 13-month high. Freeport-McMoRan Copper & Gold Inc. increased 4.6 percent. Benchmark equity indexes for Asia and Europe climbed more than 1 percent. The dollar weakened against 15 of 16 major currencies tracked by Bloomberg, while crude oil surged 2.6 percent and copper snapped a two-day losing streak.

The Standard & Poor’s 500 Index advanced 2.2 percent to 1,093.08 at 4:05 p.m. in New York for its sixth straight gain. The Dow added 203.52 points, or 2 percent, to 10,226.94. Nine stocks gained for each that fell on the New York Stock Exchange.

“This is real bull market stuff,” said Hugh Johnson , who manages more than $1.6 billion as chairman of Albany, New York- based Johnson Illington. “No country is backing away from their program of fiscal stimulus. That’s good news for the global economy and not such good news for inflation. That’s why you’re seeing stock markets around the world going higher.”

Shares of American companies that take in more revenue from abroad have outperformed those with higher proportions of domestic sales as the dollar weakened in the past eight months, making U.S. products cheaper overseas. The 50 companies in the S&P 500 with the highest percentage of overseas sales jumped 76 percent since the benchmark index’s 12-year low on March 9, according to an index compiled by Goldman Sachs Group Inc.

Multinationals and the Dollar

The Dollar Index , a six-currency gauge of the greenback’s strength, has tumbled 16 percent since then and weakened to a 15-month low today as the G-20 agreement encouraged investors to buy higher-yielding assets. S&P 500 companies with little or no revenue outside the U.S. climbed 55 percent since March 9, based on the Goldman Sachs measure .

General Electric Co., the world’s largest maker of power- plant turbines, rallied 3.4 percent to $15.85 today. Caterpillar, the biggest maker of bulldozers, jumped 4.2 percent to $60. Intel Corp., the largest maker of computer chips, increased 2.8 percent to $19.46. Each of the companies gets more than half of its revenue from overseas.

GE also rose after the company agreed with Comcast Corp. to value its NBC Universal at about $30 billion as they discuss creating a joint venture to own the entertainment division, according to three people familiar with the matter.

G-20 Agreement

U.K. Chancellor of the Exchequer Alistair Darling , hosting a meeting of finance ministers from G-20 nations, said his colleagues decided to keep interest rates low and maintain record budget deficits until economic recoveries take hold. The G-20 split on whether to introduce a so-called Tobin tax on financial trading as part of a broader strategy to ensure the global economy’s expansion is less crisis-prone.

Financial companies gained the most of 10 industry groups in the S&P 500, adding 3.6 percent collectively.

The Federal Reserve said nine of 10 bank holding companies deemed short of capital in May have raised their reserves enough to withstand the risk of higher unemployment and slower economic growth. Bank of America Corp. added 4.8 percent to $15.77 and Morgan Stanley added 4.1 percent to $33.95.

Goldman Sachs Group Inc. climbed 2.8 percent to $176.57. The most profitable securities firm in Wall Street history is underwriting $400 million of bonds backed by an Ohio real estate company’s shopping centers in the first sale to tap a U.S. program to unlock lending in the commercial mortgage market.

Raw-material producers companies added 3.2 percent for the second-biggest gain among 10 groups in the S&P 500.

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