This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Stocks Rise; S&P 500 Breaks Through 1200

Stocks in this article: ^DJI^GSPC^IXIC

NEW YORK ( TheStreet) -- Stocks posted solid gains Wednesday with investors heartened by progress in the eurozone to bolster its bailout fund and bulwark its financial system.

The Dow Jones Industrial Average climbed 103 points, or 0.9%, to close at 11,519, putting the blue-chip index up five of the last seven days. The Dow also turned positive for the year during the trading session, topping its 2010 closing level of 11,578, but pared gains into the close.

Bank of America (BAC), Walt Disney (DIS) and JPMorgan Chase (JPM) led the blue chips index higher, while Alcoa (AA) and McDonald's (MCD) were the biggest blue-chip decliners.

The S&P 500, which gained 12 points, or 0.98%, to finish at 1207, also eased off its intraday highs. The index, however, peaked above 1220 for the third time in the last two months, a period where it's been stuck in an 1120-to-1220 range. Technical analysts believe that breaking past 1220 may indicate further upside. Meanwhile, the Nasdaq closed ahead 22 points, or 0.84%, at 2605.

The S&P 500's volatility index, the VIX, lost nearly 7%, closing out just above 30. The index has been above 30 since early August.

Market breadth was overwhelmingly positive but volume was light. About 80% of the 4.6 billion shares trading on the New York Stock Exchange gained ground while only 20% declined. Some 2 billion shares traded on the Nasdaq.

Markets were buoyed by signs that Europe is getting serious about shoring up its financial system. The European Commission outlined plans to assess how much capital banks need, saying that it will push for fresh reviews of eurozone banks that will utilize higher capital ratios and consider scenarios in which banks may have to take bigger losses on their holdings of Greek bonds, according to a Wall Street Journal report.

The commission also recommended that Greece receive another round of bailout funding and that a permanent eurozone rescue fund be launched by mid-2012. The commission said the bank should first try raising more capital from financial markets before approaching national governments, and that the bailout fund should be used to recapitalize banks as a last resort.

Investors expect European policymakers to further discussions on how to shore up banks at a summit on Oct. 23.

In another sign that Europe is nearing further relief for its debt crisis, Slovakia is expected to approve the expansion of the European Financial Stability Facility by Friday at the latest. Slovakia, the last nation out of 17 eurozone members to approve the fund's reform, voted against the measure on Tuesday.


"Markets are higher across the board because there's confidence that we will get some resolution to the European debt crisis," said Peter Cardillo, chief market economist for Rockwell Global Capital.

"The market is warming up to the fact that we're going to see another strong earnings season, and some of the fear factors regarding Europe are beginning to ease," he said.

Renewed confidence in European leaders' dedication to tackle the region's problems helped European markets on Wednesday. London's FTSE added 0.7%, and Germany's DAX finished 2.2% higher. Overnight, Asian markets saw mixed trading. Japan's Nikkei Average closed 0.4% lower, while Hong Kong's Hang Seng rose 1%.

At 2 p.m. ET, the Federal Reserve released notes from its latest two-day meeting in late September in which it decided to move forward with "Operation Twist." Two members of the central bank called for stronger action, indicating that further quantitative easing may not be off the table. However, given that investors expected Fed members to have discussed monetary easing, the report hardly surprised the market.

Late Tuesday, aluminum producer Alcoa (AA) unofficially kicked off the beginning of the third-quarter earnings season with lower-than-expected earnings. Alcoa reported a profit of 15 cents a share vs. a consensus estimate of 22 cents per share. Sales of $6.42 billion, however, exceeded projections for revenue of $6.22 billion. Wall Street had been expecting some pressure on earnings because of the recent plunge in aluminum prices. Shares of Alcoa lost 2.4% to $10.05.

Hewlett-Packard (HPQ) is reconsidering a plan to spin off its personal-computer business, according to a Wall Street Journal report, which also said that new CEO Meg Whitman is hoping to make a final decision by the end of the month. Shares shed 0.19% to $25.87.

In other earnings news, shares of PepsiCo (PEP) rose 2.9% to $62.70 after the company said third-quarter profit jumped 4% on strength across its snacks and beverage businesses and from the acquisition of Russian dairy and juice company Wimm-Bill-Dann.

Shares of Research In Motion (RIMM) lost 2.2% to $23.88 after BlackBerry users continued to experience services disruptions for a third straight day. Research In Motion acknowledged the service glitches after saying that services returned to normal on Tuesday. The company blamed a failure in its own infrastructure.

TE Connectivity (TEL), a Swiss electronic components company, jumped 7% $32.86 Wednesday following news late Tuesday that it will replace Cephalon in the S&P 500 because Cephalon is being acquired by Teva Pharmaceutical Industries (TEVA).

In commodity markets, gold for December delivery lost $1.10 to trade at $1,681.50 an ounce. The November crude oil contract closed down 26 cents at $85.55 a barrel.

The benchmark 10-year Treasury was falling 19/32, pushing the yield to 2.214%. The dollar index, a measure of the dollar's value against a basket of currencies, was down 0.92%.

-- Written by Melinda Peer and Chao Deng in New York.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,805.41 +127.51 0.76%
S&P 500 1,964.58 +13.76 0.71%
NASDAQ 4,483.7150 +30.9230 0.69%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs