Dow Jones: 12,208.55 (+339.51) Nasdaq: 2,738.63 (+87.96) S&P 500: 1,284.59 (+42.59)US STOCKS rallied yesterday, extending the biggest monthly rally since 1974 for the Standard and Poor's 500 Index, as European leaders agreed to expand a bailout fund to $1.4 trillion and American economic growth accelerated.
“This sort of half-baked solution out of Europe comes at a good time,” Michael Shaoul, chairman of Marketfield Asset Management in New York, said.
“The market simply wanted to say – okay, we’ll give them a chance to work things out. They can mess it up, but my best guess is we put this behind us,” he said.
Global stocks rallied as European leaders cajoled bondholders into accepting 50 per cent write-downs on Greek debt and boosted their rescue fund’s capacity to one trillion euro ($1.4 trillion) in a crisis-fighting package intended to shield the euro area.
“The European agreement takes the catastrophic scenario off of the table, which is positive for risk spreads and a catalyst for valuation expansion,” Myles Zyblock, chief institutional strategist at RBC Capital Markets, wrote in a note yesterday. He raised his recommendation for US equities to “market weight” from “below benchmark”.
Bank of America increased 9.1 per cent to $7.19. JPMorgan added 8.8 per cent to $37.19.
Stocks also rose after the US economy grew in the third quarter at the fastest pace in a year as gains in consumer spending and business investment helped support a recovery on the brink of faltering.
Separate data showed that fewer Americans filed applications for unemployment assistance last week, while those on benefit rolls dropped to a three-year low, signalling limited improvement in the labour market.
Alcoa, the largest US aluminium producer, jumped 10.2 per cent to $11.42. Hewlett-Packard rose 6 per cent to $27.30. GE gained 6.4 per cent to $17.40.
Avon Akamai Technologies climbed 17 per cent to $27.75. The firm, whose server network lets businesses speed data delivery, forecast fourth-quarter sales that topped some analysts’ estimates.
Aflac jumped 9.7 per cent to $47.19. The world’s largest seller of supplemental health insurance reported profit that beat estimates and said sales were gaining in its largest market. – (Bloomberg)
