NEW YORK REPORT
STOCKS rose yesterday to 2009 highs after stronger manufacturing and retail sales data boosted commodity prices and shares of materials companies.
Yesterday’s gains lifted the S&P 500 above 1,050 for the first time since early October.
The improvement in retail sales in August reassured investors about a rebound in US economic demand. A rise in the government’s Producer Price Index signaled increased consumption of raw materials.
Metals prices rose, sending shares of aluminum company Alcoa up 8 per cent, while steelmakers AK Steel rose 5.7 per cent and US Steel gained 4.8 per cent.
The Reuters-Jefferies CRB index of commodity prices jumped 2.2 per cent for its biggest gain in more than a month, while the S&P materials sector added 2.4 per cent.
The rise in producer prices and a report showing stronger New York state manufacturing suggested demand is building for raw materials.
“To make things, you need stuff that comes from the ground, at least at the beginning of a recovery from recession,” said Kim Caughey, senior equity research analyst at Fort Pitt Capital Group.
Comments by Federal Reserve Chairman Ben Bernanke that the recession was probably at an end also favored basic materials companies, Caughey said.