Stocks Rise; S&P 500 Breaks Through 1200
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.
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.
"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 aplan 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.
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