Today U.S. stocks rallied with all of the major indexes showing gains of more than 1% after Federal Reserve chairman Ben Bernanke told Congress that the U.S. would be forced reduce funding on existing obligations like Social Security and Medicaid if they don’t raise the debt ceiling.
The Dow Jones Industrial Average was up 145 points, or 1.2% with all but one of its 30 components up today. Big gains were made by Home Depot (NYSE:HD), Caterpillar (NYSE:CAT), and Boeing (NYSE:BA), with Verizon (NYSE:VZ) the sole stock in the red.
The S&P 500 was up 18 points, or 1.4%, with shares of JCPenney (NYSE:JCP) leading the way, up 18% after announcing Apple retail executive Ron Johnson as their new CEO.
The Nasdaq Composite (COMP) was up 42 points, or 1.6%, with Chinese-language internet search provider Baidu (NASDAQ:BIDU) leading the way with a 5.75% gain.
So why such a good day when the markets have dropped nearly 6% since the beginning of May? First of all, it remains to be seen whether these sudden gains will last. Yesterday saw a slight uptick in the morning only to fizzle by afternoon, and markets were strong Thursday only to fall back into its previous position on Friday. Today’s jump is based on a number of factors, most of which usually only result in temporary gains.
The Commerce Department said retail sales only declined 0.2% in May, which was better than expected, though still a decline, while the Labor Department reported that the producer price index had risen 0.2% in May, also better than expected.
There was good news today for some businesses that pushed up individual stocks. Best Buy (NYSE:BBY) shares were up after a decent Q1 report, Apple (NASDAQ:AAPL) and Nokia (NYSE:NOK) were both up after settling a long-running patent dispute, Avis Budget Group (NYSE:CAR) shares were up after announcing a deal to acquire Avis Europe for $1 billion, and shares in competitor Hertz (NYSE:HTZ) were also up a whopping 9%. And in the commodities sector, oil gained big today, jumping $1.85 to $99.15 a barrel for July deliveries while gold futures rose $8.80 an ounce.