Stocks soar on European debt deal
Global markets surge and the Dow crests 12,000 after policymakers agree to boost the eurozone's rescue fund. GDP rises in the third quarter. Jobless claims dip marginally. Procter & Gamble meets expectations. Oil prices rise.
By Melinda Peer, TheStreet
Updated at 12:38 p.m. ET
Stocks surged 2% and the Dow Jones Industrial Average ($INDU) traded above the 12,000 mark Thursday on news that European leaders agreed on key details of a strategy to address the eurozone debt crisis during a Wednesday summit.
All major U.S. indices moved into positive territory for the year. The Dow Jones Industrial Average ($INDU) was up 306.5 points, or 2.5% at 12,175. The S&P 500 ($INX) was gaining 36.1 points, or 2.9%, at 1,278 and the Nasdaq ($COMPX) was ahead by 75.3 points, or 2.8%, at 2,725.
Negotiations from Wednesday’s summit of European leaders in Brussels dragged overnight, but news of a strategy agreement had global markets heaving a huge sigh of relief on Thursday. French President Nicolas Sarkozy said the European Financial Stability Facility will be leveraged by four to five times to provide guarantees on bonds of struggling eurozone member countries. Additionally, private banks agreed to take a 50% reduction on Greek debt held by private investors.
In Europe, London's FTSE rose 2.8%, and Germany's DAX soared 5.3%. Overnight, Asian markets surged on the news. Japan's Nikkei Average gained 2%, and Hong Kong's Hang Seng jumped 3.3%.
The dollar index, a measure of the dollar's value against a basket of currencies, was declining 1.52%, and the euro was falling 1.7% against the greenback.
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On the economic front, the economy grew 2.5%, as expected, in the third quarter, according to an initial reading on gross domestic product. That compares with growth of 1.3% in the second quarter.
Meanwhile, the latest labor data showed the unemployment picture was little changed with initial jobless claims falling by 2,000 to 402,000 in the week ended Oct. 22.
The National Association of Realtors said pending-home sales fell 4.6% in September from the prior month, disappointing expectations for a flat reading.
The benchmark 10-year Treasury was down 29/32, lifting the yield to 2.315%.
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In Thursday’s earnings news, Dow component Exxon Mobil (XOM) topped Wall Street’s profit expectations by a penny with third-quarter earnings of $2.13 a share. Shares were advancing 0.2% to $81.28.
Fellow Dow component Procter & Gamble (PG) met analysts’ estimates with fiscal first-quarter earnings of $1.03 a share and said sales rose 9% to $21.92 billion, topping expectations for revenue of $21.53 billion. The stock was shedding 0.02% at $64.94.
All 30 Dow components were trading in positive territory but Exxon Mobil and Procter & Gamble were holding the mildest gains.
Shares of Royal Dutch Shell (RDS.A) were rising 1.1% to $73.21 after the oil company said third-quarter profit doubled on higher oil prices.
Aetna (AET) stock was jumping 3.7% to $40.35 after the health insurer surpassed analysts' estimates with third-quarter operating earnings of $1.14 a share on lower-than-expected usage. Wall Street had projected a profit of $1.15 a share.
In other news, Sony (SNE) will acquire Ericsson’s (ERIC) 50% stake in their Sony Ericsson mobile phone venture, making the mobile handset business a subsidiary of Sony. Sony acquired the stake for 1.05 billion euros, or $1.47 billion in cash. Shares of Sony were rising 5.8% to $21.82.
In commodity markets, gold for December delivery was adding $21.30 at $1,744.80 an ounce, while the December crude oil contract was trading $3.29 higher at $93.49 a barrel.
Spain, Italy, and Portugal will demand the same favorable treatment as Greece, then what?
Were it not for Germany the Euro would have minimal value. The EU future is bleak as these countries were never on the same page economically.
The IMF receives the majority of their funding courtesy of the American taxpayer. Where do we come up with the cash to continue this theft?
As usual the devil is in the details, and the details always put the screws to the American taxpayer.
What a bunch of crapola. Greece's deal is going to allow them to 'write-down' 50% of their debt, that's a good deal, to me that's called insolvency, and it's coming to America if we don't stop spending money we don't have. Stock market rise my ****, what happens is that the US dollar gets devalued, crude oil goes up and so does everything thing in my life, food, gas, clothing, etc.
To hell with the stock market and the fat cats making deals that won't be investigated until it's too late, recall 2008, no one went to prison, but we got stuck bailing those bastards out, it's going to happen again and soon with this kind of reasoning.
Yipee, my stocks are up 10%, and oil and gas is only up ......... 20%.
Oh, I see.
So the Greeks are willing to pay half of what they owe private investors. I grew up in a neighborhood with many Greek immigrants and they were a very proud group of people. You could always trust them to keep their word. What has happened to this world when it is acceptable for individuals and entire countries to default on their debts not due to war or natural disaster but due to their own inability to control their spending. Where is their pride?
quoted text: It is inevitable that we are going to have to increase taxes on everyone. But I don't want to pay 1 cent more in taxes until our leaders can prove to me that they can eliminate waste, pork, and use tax revenues wisely.
ROFLMAO and which planet are you from Disgusted.
Wishful thinking at its' best.
I agree - it's just how I feel. And I believe there's a whole lot of Americans out there just like me that feel the same way.
We need to elect more people to government that feel the same way. Oh, I kinda think that's how the Tea Party came about.
Now its on to more interesting things such as criticizing the Tea Party and Herman's 9-9-9 plan.
I like Cain. I don't like his 9-9-9 plan.
While I can afford to pay more in taxes, I don't want to because the government just pisses it away. I want to see cuts in spending before considering any form of increased taxation.
The government spending is so out of control, that even if the government confiscated the entire wealth of the top 10% (not just taxing their income at 100%, but took their entire wealth), it would not equal the current deficit, so at the current spending levels, there is no way to balance the Federal budget without putting the additional tax burden on the middle class.
It is inevitable that we are going to have to increase taxes on everyone. But I don't want to pay 1 cent more in taxes until our leaders can prove to me that they can eliminate waste, pork, and use tax revenues wisely.
I think we need to create new measures of supposed prosperity rather than using the old stand bys. At best, the stock market is an indication of how good the well off are doing. At worst, it's nothing more than a casino for speculators. Ergo, it has absolutely nothing to do with how the majority are faring in this economy.
Also, if the banks absorb 50% of the Greek debt, who is going to end up paying for it? You know the banks will have to find a way to fund it and most likely this will be by raising interest rates on the other countries debt. So the dominos are still going to fall, just a little slower than initially supposed.
hate to put this in here again, but _
"and yet, those arrogant SOB's at Exxon/Mobil continue to run ads complaining about increased taxes for the oil industry!!! If they would reinvest some of these obscene profits into job creation, they might get a more sympathetic ear from the American public! Drives me nuts every time I see one of those commercials!
Need to include Royal Dutch/Shell in these comments also, I guess. "Profits doubled"!!"
We went from 4 trillion dollar debt to 15 trillion under Obama and its still growing. We still have 9% unemployment.Exxon Mobil reported a 41% profit today, can you let us all know how much American Taxes are they going to pay on this amount?
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[BRIEFING.COM] The stock market finished a down week on a cautious note with small caps leading the retreat. The Russell 2000 lost 0.5%, widening its weekly decline to 2.6%, while the S&P 500 shed 0.3%. The benchmark index ended the week lower by 2.7%.
This morning, the market was provided a basis to rebound with the July employment report, which was just right for the policy doves (209K versus Briefing.com consensus 220K). It showed payroll growth that was weaker than expected, ... More
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