Dow jumps, Nasdaq over 3000; Good news for the ASX

The US markets had a vibrant session overnight Australian time, delivering the strongest day of 2012, with the Dow Jones Industrial Average closing up 1.7%, the S&P 500 up 1.8% and the Nasdaq – not to be outdone – closed up 1.9%.

While the Nasdaq’s crossing of the 3,000 point mark is not a big deal, the fact it closed at an 11-year high isn’t to be sneezed at. The last time the Nasdaq closed over 3,000 points was on December 11, 2000, just two short months after the Sydney Olympics!

The US banks were the big winners, with both JP Morgan and Citigroup performing well, after the former announced it had passed the US Federal Reserve’s ‘stress test’. In all 15 of the 19 banks tested passed.

Optimism reigns on Wall Street

Who knows if the optimism will hold, but the US markets have clearly shaken off the GFC and are looking to a bright future.

The US central bank, the Federal Reserve, reiterated its view that US growth would be moderate, and that unemployment remains a concern. In brighter news, the US retail figures released overnight were encouraging, showing the strongest growth in 5 months, and giving further signs of what might be a nascent US consumer awakening.

The Australian ASX SPI futures index pointed to a 1% gain on our market today, as investors took confidence from the US session.

The Dow Jones has now rallied almost 8% since the beginning of the year, with the S&P 500 gaining 11% and the Nasdaq up over 16%. Our market continues to lag – up barely 4.7% since the end of 2011.

If you are looking for ASX investing ideas, look no further than “The Motley Fool’s Top Stock for 2012.” In this free report, Investment Analyst Dean Morel names his top pick for 2012…and beyond. Click here now to find out the name of this small but growing telecommunications company. But hurry – the report is free for only a limited period of time.

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Scott Phillips is a Motley Fool investment analyst. You can follow him on Twitter @TMFGilla. The Motley Fool’s purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691).

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