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Tuesday 06th of July 2010
May 19, 2009    

Positive housing and banking news boosts US shares

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by Kay Murchie
Positive housing and banking news boosts US shares

Hopes of a recovery in the US resulted in a rise in shares yesterday with the Dow Jones industrial average closing up 235 points at 8,504.08.

The rise came after a better-than-expected profit report from home improvement company, Lowe’s Cos., leading analysts to believe recovery may be closer than previously thought.

Shares plummeted last week on concerns that a recovery might be further off than hoped.

James Cox, managing partner at Harris Financial Group, said: “There’s a realisation that things are going to get better.”

Other analysts have been cautiously optimistic stating that while they are looking for signs that the economy could be heading for a recovery, the fact remains that the downward spiral is slowing.

Recovery of the US housing market is crucial to the recovery of the world’s largest economy, as is stability in the banking sector, according to analysts.

Meanwhile, the banking sector received positive news with Goldman Sachs raising its rating on Bank of America Corp. to “Buy” on expectations for solid earnings in the second quarter.

Furthermore, BMO Capital Markets upgraded its view of the banking industry, anticipating that profits will start to rebound in the medium-term.

In related news, earlier this month the US Labor Department revealed that the US jobs market might be improving.

According to the data, 539,000 jobs were lost in April, which exceeded the 600,000 economists had predicted and far less than the 699,000 jobs lost in March.

Ben Bernanke, Federal Reserve chairman, recently said he believes the US recession will come to an end.

Meanwhile, across the Atlantic, London’s FTSE 100 closed up 2.3%, while France’s CAC-40 was up 2.4% and Germany’s DAX index gained 2.%.

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