Dow surges as central banks join forces

By Andrea Tse

Updated at 12:49 p.m. ET

U.S. stocks were surging Wednesday, catapulting the Dow more than 400 points, after some of the world's biggest central banks said they would take steps to boost the global economy. 

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These promising developments have, for now, helped steer some attention away from the shaky details on how European finance ministers plan to bolster the European rescue fund after their meeting in Brussels on Tuesday. Investors are now looking at the European summit on Dec. 9 for more direction on how European leaders plan to contain the debt crisis amid soaring borrowing costs in Spain and Italy. Economic and Monetary Affairs Commissioner Olli Rehn said Wednesday that Europe faces a “critical” period of 10 days to rescue the eurozone.

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Trading volume was mild, with about 1.3 billion shares changing hands on the New York Stock Exchange and roughly 491 million on the Nasdaq.

In corporate news, Standard & Poor's cut its ratings of Goldman Sachs (GS), Bank of America's (BAC) Merrill Lynch unit and Citigroup's (C) long-term debt to A-minus from A, and put their ratings on a "negative" watch. S&P's new ratings were part of a sweeping change to its rating method for 37 financial institutions published earlier this month. Wells Fargo (WFC) was downgraded to A-plus from AA-minus, and JPMorgan Chase (JPM) was cut to A from A-plus.

Pfizer's (PFE) best-selling product, the cholesterol drug Lipitor, will be offered in generic form starting Wednesday. The drug manufacturer has reached an agreement with some drugstores and pharmacy benefit managers that will allow patients to receive Pfizer's Lipitor at similar or potentially lower co-payments than the generic version. The move aims to help Pfizer to hold onto sales of the blockbuster drug. Watson Pharmaceuticals (WPI) said Wednesday it began shipping an authorized generic version of Lipitor.

OmniVision Technologies (OVTI), the digital imaging company, gave a weak outlook for the current quarter. OmniVision, which makes image sensor chips used in mobile phones, computers and other products, said it expects non-GAAP earnings of 5 cents to 17 cents a share for the quarter ending in January, with revenue between $160 million and $180 million. Analysts expect Omnivision to post a profit of 26 cents a share in the quarter on revenue of $201.4 million.

WebMD (WBMD) is exploring a sales process, according to a source with knowledge of the situation. The medical information company is already in discussions with private-equity firms, the source said, and has hired an investment bank, which is believed to be Credit Suisse.

The U.S. dollar index, which measures the dollar against six currencies, was falling 0.9% at $78.326 because the central bank effort will lead to more dollar-lending at cheaper prices. Gold, considered a hedge against inflation, for February delivery was adding $29 at $1,747.90.

The benchmark 10-year Treasury was falling 21/32, lifting the yield to 2.07%.

In economic news, Automatic Data Processing (ADP) said companies added 206,000 jobs in November, up from a revised 130,000 in October. Economists surveyed by Thomson Reuters had expected private-sector jobs to increase by 130,000 in November.

The Chicago Institute for Supply Management said its gauge of manufacturing activity in the upper Midwest increased to 62.6 in November from 58.4 in October.  Economists had forecast the purchasing managers index to remain unchanged. A reading above 50 indicates expansion in the manufacturing sector.

The National Association of Realtors' pending home sales index for October iincreased by 10.4% to a reading of 93.3 from 84.5 in September. Economists had expected to see a 1.5% gain, according to Thomson Reuters.

“Today’s solid batch of domestic economic data in the U.S. reminded the market that we in in a very different economic backdrop today than we were in 2008,” LPL Financial economist John Canally said.

The Federal Reserve will issue its Beige Book summary of economic conditions in 12 Federal Reserve districts at 2 p.m.

China's central bank also said Wednesday that it will cut the reserve requirement ratio for lenders by 50 basis points starting Dec. 5. The move, the first since December 2008, is expected to help bolster China's economy and increase liquidity while markets in developed nations struggle to stabilize. The rate cut may also signal that China will consider loosening its monetary policy in the future.