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Stocks End Up 1.4% Amid Recovery Hopes

Published: Tuesday, 6 Oct 2009 | 5:29 PM ET

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By: Cindy Perman
Writer

Stocks rallied for a second day Tuesday as news that Australia has raised rates revitalized hope for the global recovery.

The Dow Jones Industrial Average jumped 1.4 percent, adding to its 1.2-percent gain from Monday. The S&P 500 added 1.4 percent and the Nasdaq advanced 1.7 percent.

Major U.S. Indexes

.DJIA

.NCOMP

.SPX

All 30 Dow stocks finished higher, led by Alcoa [AA Loading... () ], Intel [INTC Loading... () ] and JPMorgan [JPM Loading... () ].

The big news in the market today was that Australia raised its key interest rate, becoming the first major economy to do so since the financial crisis began.

Gold settled at a record near $1,039 an ounce after hitting an intraday record high above $1,045. Oil settled above $70 and the dollar retreated.

Dow energy components ExxonMobil [XOM Loading... () ] and Chevron [CVX Loading... () ] gained 1.6 percent and 1.7 percent, respectively.

One popular topic of conversation in the oil pits today was a report that oil producing nations are in talks to replace the U.S. dollar with a basket of currencies for trading oil.

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Boeing [BA Loading... () ] finished at the bottom of the Dow pack after the aerospace giant said it will take a charge of $1 billion in the third quarter because of higher production costs and tough market conditions for its 747-8 program. And, it will delay the first flight of the jumbo 747-8 Freighter to 2010.

Banks were the leader in Europe after Bank of America-Merrill Lynch upgraded European banks to "overweight." This comes on the heels of Goldman Sachs' upgrade of the large-cap banking sector in the U.S. on Monday.

In the U.S., gains were more modest: JPMorgan was up 2.5 percent, while Bank of America[BAC Loading... () ] gained just 0.2 percent.

Microsoft [MSFT Loading... () ] gained 1.9 percent after the software giant released new mobile-phone software to take on Apple [AAPL Loading... () ] and its iPhone.

Intel [INTC Loading... () ] and other chip stocks rallied after research firm Gartner said it expects global semiconductor revenue could grow about 10 percent next year, after a two-year slide, amid increased demand for computers and smartphones.

All this, of course, could be either waylaid or boosted by earnings season, which officially kicks off tomorrow afternoon when Dow component Alcoa reports quarterly results.

Poll: Where Is the Dow Headed: 9,000 or 10,000?

There are no major economic reports on the calendar today, and very few notable earnings reports. After the bell, investors will get quarterly numbers from Yum Brands, [YUM Loading... () ] the parent of the KFC, Taco Bell, and Pizza Hut chains.

The Treasury auction of 3-year notes was met with decent demand. The Treasury sold $39 billion of 3-year notes, with a bid-to-cover ratio of 2.76.