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Stocks rally after Mubarak relinquishes power
Source: Agencies |
February 12, 2011, Saturday
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STOCKS ended the week with a moderate gain yesterday after the resignation of Egypt's President Hosni Mubarak eased investors' fears about a spread of violence to oil-producing countries.
The Dow Jones industrial average, down nearly 50 points early in the day as Mubarak tried to remain in office, closed up 44. The price of oil fell to a 10-week low.
Investors have been concerned during the nearly three weeks of anti-government demonstrations in Egypt that the unrest could spread to countries like Saudi Arabia, one of the world's biggest exporters of oil. Traders' uneasiness didn't stop the market from rising in response to strong fourth-quarter earnings, and it didn't' stop the Dow from making its first move past 12,000 since June 2008. But Egypt nonetheless has been a nagging concern.
"The market is relieved that the unrest in Egypt has come to an end with Mubarak having relinquished power," said Peter Cardillo, chief market economist at Avalon Partners.
Cardillo noted that news of Mubarak's resignation came shortly after encouraging US economic news, a pickup in consumer's feelings about the economy. The University of Michigan's consumer sentiment index rose to 75.1 in February, from 74.2 in January, economists said. The index of current conditions rose to 86.8, its highest reading since January 2008.
Economists said they expect consumer confidence to continue to rise this year as hiring increases and consumers' finances improve. The next reading on consumer spending comes Tuesday, when the Commerce Department releases retail sales numbers for January.
The Dow rose 43.97, or 0.4 percent, to 12,273.26, its highest close since June 2008.
The Standard & Poor's 500 index rose 7.28, or 0.6 percent, to 1,329.15. The Nasdaq composite index rose 18.99, or 0.7 percent, to 2,809.44.
Bond prices rose. The yield on the 10-year Treasury note, which is used to help set interest rates on loans including mortgages, fell to 3.64 percent from late Thursday's 3.71 percent.
Egypt is not a major producer of oil, but it plays a key role in the industry because it controls the Suez Canal, a major route for oil tankers and cargo ships. Crude oil was trading higher earlier in the day, but fell US$1.15 to US$85.58 after the news about Mubarak came out.
Wael Ziada, head of Egypt research at EFG-Hermes, says questions will remain for the next few months about how stable the country is and "how the military will be ruling."
Among big stock moves, Expedia plunged 17 percent after the online travel company said its earnings fell 30 percent due to higher expenses. Chipotle Mexican Grill rose 7 percent after its earnings soared 47 percent.
The Dow Jones industrial average, down nearly 50 points early in the day as Mubarak tried to remain in office, closed up 44. The price of oil fell to a 10-week low.
Investors have been concerned during the nearly three weeks of anti-government demonstrations in Egypt that the unrest could spread to countries like Saudi Arabia, one of the world's biggest exporters of oil. Traders' uneasiness didn't stop the market from rising in response to strong fourth-quarter earnings, and it didn't' stop the Dow from making its first move past 12,000 since June 2008. But Egypt nonetheless has been a nagging concern.
"The market is relieved that the unrest in Egypt has come to an end with Mubarak having relinquished power," said Peter Cardillo, chief market economist at Avalon Partners.
Cardillo noted that news of Mubarak's resignation came shortly after encouraging US economic news, a pickup in consumer's feelings about the economy. The University of Michigan's consumer sentiment index rose to 75.1 in February, from 74.2 in January, economists said. The index of current conditions rose to 86.8, its highest reading since January 2008.
Economists said they expect consumer confidence to continue to rise this year as hiring increases and consumers' finances improve. The next reading on consumer spending comes Tuesday, when the Commerce Department releases retail sales numbers for January.
The Dow rose 43.97, or 0.4 percent, to 12,273.26, its highest close since June 2008.
The Standard & Poor's 500 index rose 7.28, or 0.6 percent, to 1,329.15. The Nasdaq composite index rose 18.99, or 0.7 percent, to 2,809.44.
Bond prices rose. The yield on the 10-year Treasury note, which is used to help set interest rates on loans including mortgages, fell to 3.64 percent from late Thursday's 3.71 percent.
Egypt is not a major producer of oil, but it plays a key role in the industry because it controls the Suez Canal, a major route for oil tankers and cargo ships. Crude oil was trading higher earlier in the day, but fell US$1.15 to US$85.58 after the news about Mubarak came out.
Wael Ziada, head of Egypt research at EFG-Hermes, says questions will remain for the next few months about how stable the country is and "how the military will be ruling."
Among big stock moves, Expedia plunged 17 percent after the online travel company said its earnings fell 30 percent due to higher expenses. Chipotle Mexican Grill rose 7 percent after its earnings soared 47 percent.
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