Optimism over euro zone revives Wall Street

Dow Jones:11,043.86 (+272.38) Nasdaq:2,516.69 (+33.46) S&P 500:1,162.95 (+26.52)

US STOCKS advanced yesterday, giving the Dow Jones Industrial Average its biggest rally in one month, on speculation European leaders will act to prevent the region’s debt crisis from getting worse.

“You had some quasi-positive comments out of Europe,” Russ Koesterich, the San Francisco-based global chief investment strategist for the IShares unit of BlackRock, said.

“The situation in Europe is a near-term risk, but if the global economy muddles through, you’ll probably have room for a rally in stocks,” he said.

The Dow Jones industrial average ended up 272.38 points, or 2.53 per cent, at 11,043.86.

The Standard & Poor’s 500 Index rose 26.52 points, or 2.33 per cent, at 1,162.95.

The Nasdaq Composite Index climbed 33.46 points, or 1.35 per cent, at 2,516.69.

Stocks were having the worst quarter on record relative to US Treasuries and gold, which could force investors to buy equities to rebalance their allocations, said Marko Kolanovic, the New York-based global head of equity derivatives strategy at JPMorgan.

ECB policy makers are likely to debate restarting their covered-bond purchases next week along with further measures to ease monetary conditions, a euro-region central bank official said.

The reintroduction of 12-month loans to banks will also be discussed at the ECB’s October policy meeting, said the person, who spoke on condition of anonymity because the information is confidential. Interest-rate cuts are likely to be discussed, though they are not on the current agenda, the official said.

Financial shares were among the session’s best performers, with the KBW bank index up 5.2 per cent. Dow component JPMorgan Chase advanced 7 per cent to $31.65 while Citigroup gained 7 per cent to $26.72.

Apple fell 0.3 per cent to $403.17 after an analyst said the iPhone maker was cutting orders from suppliers of parts for its iPad tablet. The stocks fell as much as 3.2 per cent earlier in the session.

On the upside, Boeing provided a major lift to the Dow a day after the manufacturer delivered its long-awaited Dreamliner jet to its first airline customer. The stock rose 4.2 per cent to $62.01. – (Bloomberg/Reuters)