Stocks Rally, Led by Energy, Increase in Jobs
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American stocks rallied, led by the biggest gain in energy shares in six years, after oil jumped by more than $4 a barrel and a private report showed an unexpected increase in jobs.
All 39 energy producers in the Standard & Poor’s 500 Index advanced as crude climbed on a decline in gasoline inventories. Wal-Mart Stores Inc. and Walt Disney Co. gained after ADP Employer Services said payrolls grew by 9,000 in July. Bank of America Corp. and Wachovia Corp. led financial shares higher after the Federal Reserve extended an emergency lending program and the Securities and Exchange Commission prolonged a ban on a type of short sale.
The S&P 500 added 21.06 points, or 1.7%, to 1,284.26, capping its biggest two-day rally since April. The Dow Jones Industrial Average jumped 186.13, or 1.6%, to 11,583.69. The Nasdaq Composite Index increased 10.1 to 2,329.72. Almost two stocks rose for each that dropped on the New York Stock Exchange.
“A strong up day from energy is going to move the whole index,” a money manager at Boston Advisors LLC in Boston, which oversees $2 billion, said James Gaul, said. “Investors are looking for any excuse possible to push this market up. They’re tired of being in a down market.”
The S&P 500 extended its rebound from an almost three-year low on July 15 to 5.7% as nine of 10 industry groups advanced. Stocks rallied at the open after the ADP report defied economists’ forecasts for a decrease of 60,000 jobs.
Financial stocks briefly erased their advance around midday before rallying in the afternoon. Traders said the late-day gains resulted from investors covering bets that the shares would fall further because of oil’s advance.