Stocks Post Third Day of Gains
NEW YORK (TheStreet) -- Stocks rallied for a third straight session Thursday, helped by growing indications that a recapitalization plan for Europe's banks could be in the works.
The Dow Jones Industrial Average surged sharply before the close, gaining 183 points, or 1.7%, to close at 11,123. The S&P 500 and Nasdaq each added close to 1.8%, with the S&P up 21 points at 1165 and the Nasdaq up by 46 points at 2507.
Market sentiment got a lift from news that European Commission President Jose Manuel Barroso is asking member countries to undergo coordinated recapitalization of regional banks, according to The Wall Street Journal. German Chancellor Angela Merkel's acknowledgement that eurozone banks don't have sufficient capital also gave renewed support to investors speculating that Europe's leaders are working to shore up the region's financial system.
Without a formal announcement of such a coordinated plan, however, the market continues to find itself hostage to the latest headlines. "The risk of being caught on the wrong side of the next headline is extremely high," said Real Money columnist Rev Shark in a blog post.Shark explained that in a market where technical analysis and fundamentals provide little help, many investors are "find[ing] themselves handcuffed." A small snapback in new jobless claims above 400,000 helped set the tone ahead of the government's unemployment for September on Friday. The increase in claims was lower-than-expected. "The economy still appears to be clawing its way forward, but positive momentum is quickly waning," said Jim Baird, chief investment strategist for Plante Moran Financial Advisors after the report's release. "Volatility thrives on uncertainty ... we remain cautious in our near-term outlook for the economy and risk asset returns." As expected both the Bank of England and the ECB voted to keep their key interest rates unchanged. Stock futures cut back early gains nevertheless after the ECB announcement to keep its rate at 1.5%. Stocks later rebounded, however, helped in part by comments from ECB President Jean-Claude Trichet that the central bank would continue its bond buying program and extend loans to banks to prevent liquidity problems. Amid the flow of chatter from across the pond, the U.S. was also transfixed by news that former Apple (AAPL) CEO Steve Jobs passed away after battling pancreatic cancer. Known as one of Silicon Valley's greatest innovators, Jobs stepped down from his position as CEO in August but remained chairman of the company's board. Apple shares slipped 0.2% to $377.37.
Stocks followed strong gains in European markets Thursday. London's FTSE surged 3.7% and Germany's DAX gained 3.2%. Hong Kong's Hang Seng soared 5.7% and Japan's Nikkei Average jumped 1.7%.
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