Euro zone progress extends Wall Street gain
Financial shares rallied after the European Central Bank announced plans, in coordination with other major central banks, to make it easier for euro zone institutions to borrow dollars.
Major stock indices rose more than 1 per cent. Shares of banks, among the hardest hit by the debt worries, outperformed other sectors.
The S&P financial index jumped 2.6 per cent and the S&P industrial index rose 1.9 per cent. Bank of America gained 4 per cent to US$7.33 (RM22.48) while conglomerate General Electric advanced 2.8 per cent to US$16.08.
“The bottom line is the EU and the IMF and the industrial nations are trying to convince the market that the euro is here to stay, euro land is not going to disintegrate and Greece is probably going to avoid a default,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
While the S&P 500 index is still down 10 per cent since July 22, the broad gauge has managed a 4.8 per cent gain so far this week and is on track for its best weekly percentage gain since the start of July.
Worries about a Greek default have plagued the stock market for weeks. The central bank action was the latest sign this week that Europe’s political and economic leaders were stepping up their commitment to contain the crisis.
The Dow Jones industrial average was up 186.45 points, or 1.66 per cent, at 11,433.18. The Standard & Poor’s 500 Index was up 20.43 points, or 1.72 per cent, at 1,209.11. The Nasdaq Composite Index was up 34.52 points, or 1.34 per cent, at 2,607.07.
Advancers led decliners by more than 3 to 1 on the New York Stock Exchange and by 2 to 1 on Nasdaq.
Volume was 7.5 billion shares on the NYSE, Amex and Nasdaq, just below last year’s average of roughly 7.6 billion.
Optimism over containing the debt crisis offset the impact of disappointing US economic data.
New weekly US jobless claims hit their highest level since late June and a gauge of New York state factory activity contracted in September.
Another report showed manufacturing activity in the Mid-Atlantic region contracted for a second month in a row.
After the closing bell, shares of BlackBerry maker Research In Motion dropped 17.4 per cent to US$24.40 after it reported a sharp drop in quarterly profit and gave an outlook that did not go beyond what analysts had anticipated. The stock finished regular-session trading in New York down slightly at US$29.54.
During the regular session, Netflix Inc shares slumped 18.9 per cent to US$169.25 after it cut its third-quarter subscriber outlook, citing a price increase that spurred customers to shy away from its DVD-only service.
Also, US-traded shares of UBS AG shed 10 per cent to close at US$11.41 after the company said a trader who lost the Swiss bank around US$2 billion in unauthorised deals had been arrested in London. — Reuters