Dow soars 490 as central banks extend help to Europe

The blue chips see their biggest 1-day gain since 2009. The central banks' move is meant to ensure European banks won't get caught in a cash crunch. China eases credit. Private employers added more than 200,000 jobs in November.

By Charley Blaine Nov 30, 2011 2:00PM
Charley BlaineUpdated: 7:40 p.m. ET

Stocks soared today after a consortium of six central banks acted to make additional funds available to ease strains from Europe’s debt crisis.

The central banks' move sent the Dow Jones industrials ($INDU) surging 490 points, their biggest gain since March 2009 and their first close above 12,000 since Oct. 15. It trimmed losses for U.S. stocks in November substantially. The rally pushed the Dow and the Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, back into positive territory for 2011. Crude oil (-CL) led commodity prices higher.

Stocks in Europe rallied on the news, announced early today. Just before the banks announced their move, China eased bank reserve requirements to try to ensure that a slowdown in its economy doesn't worsen.

This was the biggest international move to shore up global financial stability since the financial crisis of 2008-09. Europe is in such bad shape, the Guardian newspaper reported today, that financial ministers were told Italy was on the brink of insolvency. Late today, Otto Rehn, the European Union's economic and monetary affairs commissioner, told finance ministers they have 10 days to fix the crisis, or the euro will disintegrate.

The Dow closed up 490 points, or 4.2%, to 12,046. The Standard & Poor's 500 Index ($INX) was up 52 points, or 4.3%, to 1,247. The index had closed below 1,200 in the prior six sessions. The Nasdaq Composite Index ($COMPX) was up 105 points, or 4.2%, to 2,620. It was the first close above 2,600 for the Nasdaq since Nov. 16.

Article continues below.
But it is very important to note that the volume was average at best. New York Stock Exchange volume totaled about 1.66 billion shares, a touch better than average. Nasdaq volume was about 2.4 billion shares.

Moreover, the day's volume was light until the last hour of trading. That suggested that many investors appreciate the fragility of the global economy and the risks posed by the deepening financial crisis in Europe. The big volatility is similar to the one-day gains that would hit the market in the autumn of 2008 after the fall of Lehman Brothers.

The central banks' action -- cheered by investors and jeered by many Republican presidential candidates -- signaled that the problem had reached a crisis point, Stanley A. Nabi, chief strategist for the Silvercrest Asset Management Group, told The New York Times. The central banks recognized there was a "lot of danger" in letting the current situation continue, he added.

So far this week, the Dow is up 813 points, the biggest three-day gain since Nov. 22-24,  2008. The S&P 500's three-day gain is its biggest since Nov. 23-25, 2008. The Nasdaq's three-day gain is its largest since last Aug. 13-15.


The Dow finished November up maybe 0.8%, its second monthly gain in a row. It is also a huge improvement from Friday, when the blue-chip index was down 6.1% for the month. The S&P 500 fell 0.5% for the month, with the Nasdaq down 2.4%.


For the year, the Dow is up 4%, with the S&P down 0.9% and the Nasdaq down 1.2%.


Due Thursday are two important reports:

  • The November manufacturing report from the Institute for Supply Management. 
  • The weekly report on jobless claims from the Labor Department.

In addition, automakers will report on November sales. There are indications that November auto sales will be strong. Edmunds.com expects the final tally will be close to 991,296 vehicles sold. That's enough to put the November seasonally adjusted annual rate of car sales at 13.6 million vehicles, the highest rate of the year.


Futures trading suggests a modestly lower open on Thursday.


A day of decent economic news

The Federal Reserve's Beige Book Report showed the economy growing at a "slow to moderate pace." Auto sales were fairly strong, while consumer spending rose modestly. Manufacturing was steady, and bank lending increased slightly. Residential real estate activity remains sluggish.


The Chicago Purchasing Managers Report showed new orders and production expanding to 8-month and 7-month highs, respectively. Nomura Securities noted that the gain in new orders came as inventories declined. The suggests some inventory building will coming in the fourth quarter and could lead to more hiring.


The ADP National Employment Report said private employers added about 206,000 jobs in November. Economists had expected a gain of 130,000. The report is followed by many on Wall Street as a signal of what the government will report on Friday.


The consensus estimate is for the economy to add 112,000 nonfarm jobs, with the unemployment rate holding at 9%.


The National Association of Realtors' pending home sales index rose 10.4% in October from September as buyers took advantage of falling prices and low borrowing costs. The index was also up 7.3% from a year earlier.

Energy prices -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Crude oil (-CL)

$100.36

$99.79

7.69%

9.83%
(per barrel)











Heating oil (-HO)

$3.0251

$3.0336

-1.09%

18.93%
(per gallon)











Natural gas (-NG)

$3.5500

$3.6330

-9.76%

-19.41%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.5584

$2.5398

-1.82%

4.29%
(per gallon)











Brent crude 

$110.52

$110.82

0.88%

16.64%
(per barrel)











Retail gasoline

$3.2950

$3.2950

-4.30%

7.26%
(per gallon; AAA)












What the central banks are doing
The central banks' stated goal is to "to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity."

It basically says European banks, which are starting to have troubles funding their daily operations, can borrow dollars more cheaply. The dollar shortage in Europe is the result of a pullback of American money market funds. These cut their investments in European banks by 42% between the end of May and the end of October, according to Fitch Ratings. 


As a result, the Guardian said today, banks have been charging each other more and more to turn their euros into dollars and that the rates have been reaching levels close to those when Lehman Brothers collapsed in September 2008.

Mechanically, the program works like this: The central banks will provide cheaper dollar funding to the European Central Bank. The ECB then can offer cheaper dollar loans to cash-strapped European banks.

The program, which will be in place until February 2013, doesn't solve the much larger sovereign-debt problem in Europe.

At best, analysts told The New York Times, the move could buy the 17 nations of the eurozone  more time to agree on a broader plan to stabilize financial markets. The ECB holds its next policy meeting Dec. 8, and European leaders are scheduled to meet the next day.


It's hard to find losers in the rally

All 30 Dow stocks were higher, led by JPMorgan Chase (JPM), up 8.4% to $30.97;   Caterpillar (CAT), up 8.1% to $97.88, and Alcoa (AA), up 7.6% to $10.02.The laggard: Home Depot (HD), up 0.7%, to $39.22.


A total of 490 S&P 500 stocks were higher -- along with the 10 sectors of the index. Financial, materials and energy stocks are the strongest sectors.


The individual  leaders: U.S. Steel (X), up 15.3% to $27.30, coal-producer Alpha Natural Resources (ANR), up 15.1% to $24, and regional bank Regions Financial (RF), up 14.5% to $4.11. Coal producer Peabody Energy (BTU) added 14.3% to $39.23.


The biggest laggard was Netflix (NFLX), down 4.5% to $64.53. Wedbush Securities analyst Michael Pachter cut his rating to "underperform" from "neutral." Marketing costs, he wrote clients, are out of control. The combination of acquiring content and customers is proving extremely costly.

In addition, 97 Nasdaq-100 stocks were higher, led by Joy Global (JOYG) and Wynn Resorts (WYNN), up 10.4% to $91.28 and 9.5% to $120.56, respectively.


Netflix was the biggest of the index's three losers today. The others were Virgin Media (VMED), off 0.8% to $22.16, and Ross Stores (ROST), down 0.4% to $89.09.


Gold, oil move higher 
The European move set off a rally in commodities, in large part because the euro was rallying against the dollar.

Gold (-GC) settled up $31.40 to $1750.30 an ounce. Silver (-SI) added 85.4 cents to $32.80 an ounce. Copper (-HG) rose 18.5 cents to $3.58 a pound.


Interest rates moved higher, as the dollar fell and the stock-market rally pulled cash from bonds. The 10-year Treasury yield rose to 2.071% from 1.996% on Tuesday.

Crude oil in New York was up 96 cents to $100.75 a barrel. Brent crude, the benchmark North Sea oil, was down 26 cents to $110.67.

Crude pushed higher Tuesday because of increasing tensions between Iran and Western nations over its nuclear program. Iranian students invaded the British Embassy in Tehran. Britain expelled Iranian diplomats today.


Short hits from the markets -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0100%

0.010%

0.00%

-91.67%
5-year Treasury note 

0.952%

0.928%

-5.84%

-52.78%
10-year Treasury note

2.068%

1.996%

-4.92%

-37.43%
30-year Treasury bond

3.062%

2.956%

-4.28%

-29.80%
Currencies











U.S. Dollar Index

78.491

79.151

2.86%

-1.01%
British pound

1.5706

1.5620

-2.36%

0.64%
(in U.S. $)











U.S. $ in pounds

£0.637

£0.640

2.41%

-0.64%
Euro in dollars

$1.34

$1.33

-2.97%

0.50%
(in U.S. $)











U.S. $ in euros

€ 0.744

€ 0.750

3.06%

-0.50%
U.S. $ in yen 

77.70

77.95

-0.93%

-4.51%
U.S. $ in Chinese

6.39

6.37

0.24%

-3.38%
yuan











Canada dollar

$0.981

$0.000

-1.94%

-2.20%
(in U.S. $)











U.S. dollar 

$1.020

$1.030

1.99%

2.25%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,750.30

$1,718.90

1.45%

23.14%
(per troy ounce)











Copper (-HG)

$3.576

$3.391

-1.56%

-19.60%
(per pound)











Silver (-SI)

$32.8040

$31.9500

-4.51%

6.03%
(per troy ounce)











Wheat (-ZW)

$6.1400

$6.1600

-2.27%

-22.69%
(per bushel)











Corn (-ZC)

$6.0800

$6.06

-6.03%

-2.33%
(per bushel)











Cotton 

$0.9091

0.9275

-11.13%

-37.22%
(per pound)











Coffee

$2.3690

2.2755

2.82%

-1.50%
(per pound)











Crude oil (-CL)

$100.36

$99.79

7.69%

9.83%
(per barrel)










 
137Comments
Nov 30, 2011 3:37PM
avatar

Thomas Jefferson said it best: " If the American people ever allow private banks to control the issuance of their currencies, first by inflation, then by deflation, the banks and corporations that grow up around them will deprive the people of all their prosperity until their children wake up homeless on the continent that their fathers conquered."

 

It's here folks. We've allowed it to happen. The banks control everything. We need a Thomas Jefferson right now, or Washington, or a Lincoln. The people aren't strong enough to lead themselves. Lambs to slaughter is what we have become. First a penny, then a dime, then a dollar, they take. Then they want more until we are left with nothing. Those in power now or looking to get in power don't care about you or me. They want what the Banks and Bag Men can give them. More Power and More Money!

Nov 30, 2011 2:55PM
avatar

Gee...I wonder why my broker didn't let me know what the central banks were going to do so I could have taken advantage today of the market "surge".  Do you think it's because other than certain politicians, bankers, money managers etc. this was an "inside job"? 

 

I still find it pathetic that politicians can act on "insider information" for buying and selling stocks etc. and it is all perfectly legal but if you and I did it, we would be in jail if caught.  I guess it's like it has always been...special privledges for special people..

Nov 30, 2011 4:56PM
avatar
I have watched this for years without commenting, but I want to do this now. What I perceive is that it really does not matter in how bad shape anything is, there is always an institution that can shuffle money in a hole and we can move on. My economy teacher said to me, it is from the breast pocket to the trousers pocket or visa versa.

Am I right that people who want to stop all this are just being laughed at by the next jump in the Dow Jones, S&P, NASDAQ ?

Can I suggest something ? Why buy things we actually don't need ? Why do you want the latest stuff ? 

If most people if not many would just stop buying these things that are like a $1000 each, this will stop. I have got the feeling that many are sort of hypnotized with "you must buy this" otherwise you don't belong to the system anymore. 

To me it does not really matter at all, I walk through all those shops, look at it and think, who's Boss now eh ? I am and I just walk on. I sit on the tube or the train and see everyone lacking social skills in the way of being verbal or emotional. Not even to mention those crick necks you get from all those gadgets. 

And now about cars, there used to be a time that cars would last at least 5-10 years. It's a vehicle that gets you from A to B. I do sit in some of those electronic advanced cars and think Hmm Cruise Control, Climate Control, Light Control, Wiper Control, Speed control, Blue Tooth Control, USB connection, Led Lights, Xeon Lights, Round the Corner Lights, GPS, you name it.

It's all very nice, but are we really geared for all this roaming around our heads ? It cost millions to develop and it is supposed to create jobs, but why do I read all the time the more we get these things, the more jobs go. 

Report: 200,000 jobs in the private sector, Is this not only for Christmas and then in January, bye, bye thanks for you contribution, cya.

My question in all this, why let yourself fool yourself ? The more you get into these matters, the more it will boomerang back on you.

So, I just walk by all the shops and think, Yeah yeah, you can do without me, I just get myself some chocolate and sit at home and laugh at all this. I wish many would do the same.

Believe me, being together as a family et al does not hang on giving gifts, but in simplicity, love, sharing of what is really needed. 

I personally think we are not geared or designed for it. Everything has become way too complex, way to insincere and I think quite selfish. Why feed the monsters because you know one they they will bite you really hard. You can control the monsters by not buying things that you don't need. Just a thought.






Nov 30, 2011 2:55PM
avatar
How is this good for the future of America? Print more money and give it to countries like Greece who can't get a handle on their spending. America is the country that needs help. If we are going to print money and give it away then it should go to the American citizens and not foreigners. 
Nov 30, 2011 5:35PM
avatar
Lets see if I have this right.  The central bank is giving money to the banks so they can give it to people who can't  pay what they owe now?   Didn't someone once say when you do the same thing over and over and expect a different result is the height of stupidly?
Nov 30, 2011 3:51PM
avatar

pilotowner...

 

"Another great insider trading day on wall street"

 

And it's all perfectly legal under our current laws if you are a congressman etc.  They are allowed to trade on insider information but the average person goes to jail if caught.  Talk about inequality and a corrupt system.  This is one law that needs to be changed immediately.

Nov 30, 2011 3:08PM
avatar
Wait till tomorrow when the stocks plummet because of poor economic news - housing, debt, Iran, whatever.

Every day a different story and excuse for the stocks to rise or fall.
Nov 30, 2011 5:40PM
avatar

We give over 600 billion to European banks and the Stock Market goes up so the Very big players can cash in ... we have given in the last 3 years over 7.2 TRILLION to Foreign Banks to keep them afloat ..  REMEMBER were broke and had to Borrow it ourself .. its like getting a new credit card you cant afford to give money to others to pay their credit card .... its idiotic.

 

Sooner or later there is no more money to transfer from pocket #1 to Pocket #2 then to Pocket #3 & #4 ... one day you run out of money and pockets and then its not going to be pretty ....

Nov 30, 2011 5:17PM
avatar
Thomas, please, please--we get it. You're an Occupy character. We get it. We hear you. You've banged your bucket and you're convinced that everybody's out to steal the last scraps of your student loan cash. We know there are wealth inequities--and we know that most of the richest people this year were not the richest last year and they won't be the richest next year. News flash: most people don't care how rich "the rich" really are. Most of us just want to know one thing: How much of MY money, time, education, training, experience, effort and life do you think you are owed? Instead of pointing fingers at people you envy, why not join the rest of us in working, paying our own bills and making steady, if unspectacular, progress in changing the world for the better? Please don't tell me about the 1% and the 99%--unless you're prepared to admit that YOU are in the 1% compared to the vast majority of the world's population. Nobody with a cell phone has a right to claim impoverishment, let alone somebody with a laptop, iPod, car, refrigerator, etc. Please. Give it a rest. The bucket-banging gives me a headache. 
Nov 30, 2011 2:33PM
avatar

Bernanke must have called the ECB overnight and gave them a nice speech saying "Yeah just print more money thats all we do here! You look like a hero until a couple years later when inflation and currency devalutaion set in."

Nov 30, 2011 5:18PM
avatar

This yo-yo stockmarket is making billions for someone. Wall Street is as big a joke as our two political parties.

I sure hope a true leader emerges soon to rescue us citizens. I could care less which party he comes from, just someone who has morals and the publics best intrests as a priority. No more promises.... I want positive action!

Nov 30, 2011 5:38PM
avatar
Could it be that they want us all to believe everything is rosey, so we spend like mad during Christmas? A self-fulfilling prophecy of sorts. Tell everyone that the economy is humming, then after Christmas adjust the numbers to say, oops, we need to adjust the numbers down. It seems to me that supplying money to Europe is just going to put more strain on the US and it's banks. Where will US citizens get credit if the banks are strapped due to helping Europe?
Nov 30, 2011 5:13PM
avatar
I want to know how are we going to pay our bills when the inflation rate hits the roof but our jobs give us zero raises?
Nov 30, 2011 2:59PM
avatar
fake hype all over again, the crash is looming, do not be fooled by patch job.
Nov 30, 2011 2:36PM
avatar
Odd how the morning jump was immediately followed by a very tight trading range. Wild swings of this nature are not usually prefaced by lackluster movements for the remaining session. Chances are there will be a marked pull-back before the close, which would only serve the day-traders, and do little if nothing to profit the Long Term / Fund investors since their transactions are only valued with closing numbers. 
Nov 30, 2011 6:14PM
avatar

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.---  Henry Ford 




 

Nov 30, 2011 2:39PM
avatar

Very Observant Yamanatic. Stocks scream upward on huge volume in the first ten minutes of trading and then flat line with almost no volume for the next five hours. Isn’t it amazing how millions of investors all acting independently in a free and fair market simultaneously decided that this is the right level for the Dow to be today. I would put the odds of that somewhere around one in Avogadro’s Number. We truly must be living in an age of miracles. (press sarcasm off).

Nov 30, 2011 3:35PM
avatar

We all know that money is power, and they who hold all the money, hold all the power. This is way beyond any president, they are short termers who have to answer to this power. The banks, Central Banks specifically, have that power. Well, this is the New World Order, a One World Government run by bankers for bankers and bag men. They will take care of their own because their power comes from their ability to manipulate the markets and control the money. Presidents, Prime Ministers, Kings and Queens acquiesce to these money men to maintain their own power.

 

Now we are seeing a formation of Central Banks working in concert to control the world market, hence a True World Bank in effect. Not to be confused with the current World Bank and IMF, which were founded to reduce world poverty and make conservative loans to rebuilding countries after the Second World War. That to has changed recently. The current world bank is run by Robert Zoelick, and Zoelick has been pushing hard to expand the parameters of the world bank's functions. Zoelick is formally a Director of Goldman Sachs. Of course.

 

Goldman has a large role in the European Debt crisis, and thus, the ability to profit handsomely. You can bet your farm and all it's land that GS made a boatload of money today.

The list of Sach's involvement in this New World Order cannot be over-amplified. Current ECB head, Ireland, Italy, Greece, and IMF heads all have strong ties to Goldman. We know all too well of Obama's complete acquiessence to GS throughout our own current crises; Paulsen's role, Geitner's, Blankfein's open invitation to visit the Oval office at his leisure. Bush was no better before BO. Bernacke has given GS the Treasury to do as it pleased. The AIG and Wall Street bailout was a payoff to Sachs. TARP and Warren Buffet all part of the charade. Make no mistake, Goldman owns the White House as well as the Fed. Heavily involved in international funding, energy policy and investing. It's primary concern is itself. Goldman has a large slice of blame/credit? for China's rise to power. The recent trade agreement with Malaysia, South Korea, and Vietnam also brokered for Goldman's bidding.

 

The world bank also formerly run by Paul Wolfowitz, who's role in both Iraq wars cannot be understated. New World Order concept started with the original Iraq War. The World Bank, IMF, Bilderberg meetings, top corporations, a tangled web of interconnected power brokers, and of course the largest Banks all had a profit motive to deliver this New World Order.

 

Won't matter who is president. Obama, Romney, Gingrich, and Perry will all be in on the power ride. Perry already a former attendee of the super secret Bilderberg Meetings, where all the top Bankers formulate world policy and direction. Romney's Bain Capital in bed with Goldman. Gingrich goes where the money is, as ties to Fannie, healtch care and energy companies suggest.

 

Obama was the outsider who was quickly set straight once inside the walls of real power. Won't matter who wins the next election as money begets power and influence. Only a whole new transformation of power from outside Washington and New York could possibly change the direction we are headed. Republicans, democrats, independants all part of the problem, not the solution. This is way more than political affiliation. Where is Thomas Jefferson?  We need a new Patriot Party, a whole new direction. 

 

 

 

 

Nov 30, 2011 5:33PM
avatar
But if this means that our FED was the federal reserve banks and they sent over another few $trillion of our tax dollar, this means we are in even deeper Sh!t...
Nov 30, 2011 4:23PM
avatar
Sad This is yet again another bailout not from bernanke but from the taxpayers.Sad
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min
Sponsored by:

MARKET UPDATE

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] The major averages ended the midweek session with slim gains after showing some intraday volatility in reaction to the release of the latest policy directive from the Federal Open Market Committee. The S&P 500 added 0.1%, while the relative strength among small caps sent the Russell 2000 higher by 0.3%.

Equities spent the first half of the session near their flat lines as participants stuck to the sidelines ahead of the FOMC statement, which conveyed no changes to the ... More


Currencies

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Sponsored by:

VIDEO ON MSN MONEY