Hopes from across pond support rally
US stocks rose yesterday as the slow progress from European leaders in resolving their debt crisis was enough to satisfy investors, even if early reports from an EU summit were short on detail.
The Eurozone aims to leverage its €440bn bailout fund “several fold,” but details are not expected until November, according to a draft statement obtained by Reuters.
European leaders agreed yesterday to force banks to raise more capital by June next year, to protect against losses from any Greek debt restructuring and to try to contain the region’s financial crisis.
Stocks increased gains in the afternoon as the news emerged, continuing the market’s recent rally. The S&P has risen 9.5 per cent for the month on growing optimism for a deal to address sovereign debt and bank balance sheets in Europe.
“The market has begun to discount any meaningful announcement coming from today’s meeting — that should be helpful for the markets as the bar is set pretty low,” said Joseph Tanious, market strategist at JP Morgan Funds in New York.
The Dow Jones industrial average gained 162.42 points, or 1.39 per cent, to 11,869.04. The Standard & Poor’s 500 Index rose 12.94 points, or 1.05 per cent, to 1,241.99. The Nasdaq Composite Index added 12.25 points, or 0.46 per cent, to 2,650.67.
Financials were among the best performers with JPMorgan Chase & Co up 2.1 per cent to $34.18 and US Bancorp up 2.6 per cent to $25.48. The KBW Bank index advanced 2.1 per cent.
Tanious said details still need to be worked out, including what to do about Greece’s overhang of debt.
Gains were curbed on the Nasdaq as Amazon.com Inc slumped 12.7 per cent to $198.401 a day after forecasting a disappointing outlook for the current quarter on costs related to Kindle and other investments.
On the Dow, Boeing Co rose 4.5 per cent to $66.56 as the top boost to the index after raising its outlook.
Visa Inc shed 2.1 per cent to $90.10 in extended trade after the San Francisco-based card processor posted fourth-quarter earnings.
With Europe dominating headlines, earnings have taken a back seat. According to Thomson Reuters data, of the 206 companies in the S&P 500 that have reported earnings for the quarter, 72 per cent have topped Wall Street estimates.
Economic data showed demand for a range of long-lasting US-made goods rising at the fastest pace in six months in September.