US Market rallies as oil slips and bond yields stabilize

Dow gains almost 158 points on Friday after incurring huge losses in previous three days

After incurring three days of big losses, US Market closed substantially higher today (Friday, 8 June 2007) and tried to regain back some of its week’s loss. Some merger & acquisition chatter, lower oil price and partial stabilization of bond yields powered the day’s rally.

All but two of the 30 Dow stocks closed higher for the day. The Dow Jones Industrial Average closed higher by a huge 157.66 points at 13424.39. Nasdaq closed higher by 32.16 points at 2573.54 and S&P 500 closed higher by 16.95 points at 1507.67.

GM, United Technologies, Boeing and IBM were the main Dow winners. Merck and Walt Disney were the only two laggards.

Technology turned in a strong performance and was an influential leader to the upside. Financials climbing back into positive territory for the year was also noteworthy.

But it was steel sector which was most in news on Friday. Steel stocks climbed up after ThyssenKrupp reportedly said it is interested in U.S. Steel. The news earmarked Steel as the day's best performing S&P industry group and helped Materials pace the way among all 10 sectors closing higher.

For the week, Dow, Nasdaq and S&P 500 dropped 1.8%, 1.6% and 1.9% respectively.

Bond yields soar to 5.24%, ends at 5.11%

When market opened in the morning, sense that stocks are oversold on a short-term basis provided a floor of buying support right out of the gate. Bond yields slipped from their morning highs and helped renew enthusiasm for equities.

The yield on the 10-year note was as high as 5.24% earlier but then fell at 5.15% in the course of the day after the trade deficit figure showed that it narrowed more than expected and this raised the likelihood that Q2 GDP forecasts will be revised upward. The 10 year note yield closed at 5.11% for the day.

Tech shares received a lift from the chip sector. National Semiconductor jumped almost 15% reaching an all-time high, after the company posted a smaller-than-expected drop in profit and said it was buying back $2 billion worth of shares.

Crude falls back below $65

Mc Donalds shares rose more than 2% today after saying global same-store sales rose 8.7% in May.

Crude-oil futures fell sharply in a broad commodities sell-off as traders rushed to lock in gains, sending most energy contracts down more than 3%. Crude for July delivery closed down $2.17 (3.24%) at $64.76 a barrel on the New York Mercantile Exchange. Prices plunged today on concern that rising interest rates may lead to slower growth in demand.

Trading volumes showed 1.231 billion shares changing hands on the New York Stock Exchange and 1.554 billion trading on the Nasdaq stock market. Advancing shares outpaced decliners by more than 2 to 1 on the NYSE, while gainers topped decliners by 9 to 5 on the Nasdaq.