Wednesday’s Market Recap: Stocks Rally Ahead Of Thanksgiving Holiday

Wednesday’s market action was another sigh of relief for investors as the three major U.S. averages ended well into positive territory.  The Dow Jones (^DJI) finished up 247 points to 8726 or 2.91% while the Nasdaq (^IXIC) finished up 67 points to 1532 or 4.60%.  The S&P 500 (^GSPC) also finished up almost 30 points closing at 887 for a gain of 3.53%.

Overseas Europe staged a late rally that moved the FTSE 100 (^FTSE) to down only 18.56 closing at 4152.69 or down 0.44%.  This was on top of mixed Asian markets as the Nikkei 225 (^N225) finished down 1.33% while the Hang Seng (^HSI) and Straits Times Indexes (^STI) finished up 3.81% and 3.50% respectively.

In major news President Elect Barack Obama has named former Treasury Secretary Paul Volcker as the head of his special economic recovery advisory board.  Many investors believe that Volcker did a good job dealing with a tough economic environment in the 1980s and saw this as a reason for optimism.  Volcker’s (currently 81 years old) board will be 8 to 16 members hailing from various backgrounds.

Meanwhile the Chinese Government cut their main benchmark interest rate by 1.08% this morning in an effort to make their new $4 trilllion Yuan stimulus package more effective.  Many investors believe that this stimulus is a step in the right direction in order to keep the Chinese economy close to double-digit annual GDP growth.  Some investors are skeptical of the Chinese bailout plan because a number of the infrastructure upgrade projects were already announced and then re-announced under the new bailout plan giving a falsely inflated sense of what the governement is actually spending.  The Chinese Hang Seng Index is down approximately 2/3 from its highs within the last year.

Oil railed heavily today and many of the energy stocks followed suit.  Black gold close up $3.67 today to $54.44 on the NYMEX.  ConocoPhillips (COP) led the way for the major integrated companies.  Most of the smaller players actually outperformed the major companies, especially those dealing in natural gas E&P.  Southwestern Energy (SWN) had a huge day as natural gas traded up almost 7% on the day.  This year has been extremely tough on many of the energy names but appreciation of commodity prices will lead to high equity values according to many industry analysts.

Disclosure: The mutual fund the author manages is long SWN and the author’s family is long COP.

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