Wall Street Jumps on back of Tech and Bank Stocks

Dec 23, 2007


Wall Street jumps on back of tech and bank stocks

NEW YORK - US STOCKS jumped the most in three weeks on Friday as strong results from the company behind the BlackBerry boosted technology shares and financials rose on a report that another US brokerage may get a big investment from a Singapore firm. All three major indexes rose more than 1.5 per cent, a lift that took them into positive territory for the week.

Investors were also heartened by a government report that showed US personal spending jumped more than expected in November, suggesting that consumers have not been discouraged by signs of a slowdown in the economy.

Bank stocks surged after the Wall Street Journal reported that Merrill Lynch & Co may get up to US$5 billion (S$7.3 billion) in a capital infusion from Singapore's Temasek Holdings. In the third quarter, Merrill had to write down US$8.4 billion on assets tied to risky sub-prime mortgages.
Adding to the buoyant mood, several brokerages lifted their ratings or price targets on shares of Research in Motion after the BlackBerry wireless device maker reported earnings that topped forecasts following Thursday's closing bell.

'Technology is a sector that has earnings momentum behind it with good exposure to the foreign markets,' said Mr Craig Hester, chief executive officer of Hester Capital Management in Austin, Texas.

The Dow Jones industrial average shot up 205.01 points, or 1.55 per cent, to 13,450.65. The Standard & Poor's 500 Index leaped 24.34 points, or 1.67 per cent, to 1,484.46. The Nasdaq Composite Index climbed 51.13 points, or 1.94 per cent, to 2,691.99.

For the week, the Dow rose 0.8 per cent, the S&P gained 1.2 per cent and the Nasdaq surged 2.1 per cent.

A developing theme, rooted in the wreckage of the credit crunch, is that Gulf and Asian state investors, awash with cash, have been moving into large Western banks. According to a Financial Times report, Saudi Arabia is planning to establish a sovereign fund that is expected to be larger than US$900 billion.

'The fact that you are seeing sovereign wealth funds make investments shows that they see value in these financial companies, and the market is taking some comfort from that,' Mr Hester said.

Reuters