This Day On The Street
Continue to site
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

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.

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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
MCD $101.90 0.00%
AAPL $112.07 0.68%
FB $93.34 0.58%
GOOG $645.44 0.00%
TSLA $241.46 0.00%


Chart of I:DJI
DOW 16,790.19 +13.76 0.08%
S&P 500 1,979.92 -7.13 -0.36%
NASDAQ 4,748.3610 -32.9030 -0.69%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs