Wall Street up on hopes of Fed stimulus package

Dow Jones: 11,896.44 (+29.82) Nasdaq: 2,693.07 (+23.83) SP 500: 1,260.34 (+6.29):US STOCKS rose yesterday, erasing earlier losses and preventing the longest Dow Jones Industrial Average slump since 1978, as investors speculated the Federal Reserve will start another stimulus program.

Treasuries pared gains and the dollar slid.

The Dow halted an eight-day drop, gaining 29.82 points to 11,896.44 in New York.

The SP 500 rose 0.5 per cent after Tuesday’s 2.6 per cent plunge erased the gauge’s 2011 gain and left it trading at its cheapest earnings valuation in more than a year.

Ten-year Treasury yields lost one basis point to 2.60 per cent. Oil retreated to a five-week low following a government report showing an increase in stockpiles.

The Swiss franc depreciated 1.7 per cent to 90.80 euro cents after strengthening to a record high yesterday as investors pursued assets considered to be the safest. The franc weakened 0.9 per cent from an all-time high against the dollar.

Coca-Cola, General Electric and Walt Disney rose more than 1.2 per cent to help lead gains in the Dow, which reversed a loss of as much as 166 points.

MasterCard, the second largest payments network, advanced 13 per cent for the biggest gain in the SP 500 after profits rose 33 per cent as customers’ spending increased.

Gold futures rose 1.3 per cent to a record $1,675.90 an ounce.

Speculation that the Fed will embark on a third round of asset purchases to stem off a recession grew after the Wall Street Journal reported that three former policy makers support the approach.

More than $2 trillion was erased from the value of global equities in the past week, and Treasury yields set new lows for the year, amid concern the economic recovery is faltering.

Investors are awaiting a government employment report tomorrow, which economists forecast will show the US added a net 85,000 jobs last month including a 115,000 boost to private-sector employment.

A private payroll survey by ADP Employer Services showed US companies added 114,000 workers in July. This figure topped the median forecast of economists surveyed by Bloomberg News for a rise of 100,000. – (Bloomberg. Reuters)