FX.co ★ The US stock market review for 05/10/2010

Tuesday the stock indices of the USA reached 5-month high having received a support from the part of encouraging service sector data and hopes that the Central banks of the world will follow the Bank of Japan in stimulating the economic advance. The basic materials, industrial and financial sectors promoted the growth.
By the end of trading, the Dow Jones Industrial Average rose by 193 points or by 1.8% to 10945 points, its highest closing level since May 3. The Nasdaq Composite grew by 2.4% to 2400 points. The Standard & Poor’s 500 gained 2.1% to 1161 points. Boenig shares rose in price by 3.4%, whereas the Bank of America securities were up by 3.1% and DuPont papers increased by 3%. American Express was the only one Dow component that fell in the negative territory after Justice Department civil antitrust suit. Its shares dropped by 2%. Investors’ optimism advanced ahead of the key data expected later this week. Alcoa has unofficially started the earning reports season, it will present the data on Thursday. The closely watched US non-farm payrolls will be published on Friday. The activity in the US service sector expanded better than it was expected, according to the Institute for Supply Management. This index is based on service sector companies’ reports, but also includes the data of construction and public sectors. In addition, the improving sentiment was support by unexpected decision of the Bank of Japan to buy additional bonds and decline the key interest rate to 0.1%. The Bank announced the rates would remain low until prices begin to stabilize from the deflationary pressure. Meanwhile, the Reserve Bank of Australia left its interest rates unchanged contrary to the expectations of investors, who waited for advance of the rates.