Dow Closes Above 12,000 as Greece Drops Bailout Vote
NEW YORK (TheStreet) -- Stocks finished nearly 2% higher, marking a second consecutive session of gains, after Greece dropped plans for a referendum that could have derailed Europe's plan to address its sovereign debt crisis.
The major U.S. equity indices closed near session highs with the Dow Jones Industrial Average moving back above the psychologically significant 12,000 mark. The index, which traded marginally lower early in the session, ultimately gained 208 points, or 1.8%, to settle at 12,045. The S&P 500 rose 23 points, or 1.9%, to 1261 and the Nasdaq surged 58 points, or 2.2%, to finish at 2698.
Market breadth was overwhelmingly positive, with 76% of the shares that traded on the New York Stock Exchange gaining ground while only 22% declined.All Dow components pushed higher with Hewlett-Packard (HPQ), Kraft Foods (KFT) and Bank of America (BAC) leading the way. Turmoil in Greece made for another volatile day on Wall Street, as investors tried to assess the consequences of a possible resignation of Prime Minister George Papandreou. Nervousness that the country may exit the European Union and face a default threatened to roil global stocks. Wavering plans to hold a referendum on the recently agreed upon bailout plan have all but chipped away at investor confidence in Europe's ability to tame its debt problems. As Group of 20 leaders meet in France, investors continue to closely monitor Greece's future and comments from ongoing discussions in the region. Stocks jumped at the open following a decision from the European Central Bank to cut the benchmark interest rate by a quarter of a percentage point to 1.25%. Investors cheered the bank's attempt to help the region's weakening economy. The expectations had been that new ECB President Mario Draghi would not make any changes so soon in his tenure. The market briefly gave up a chunk of its early morning gains after Draghi offered a gloomy assessment of Europe's economy. "What we are observing now is slow growth, heading towards a mild recession by year end," said Draghi in a press conference after the ECB announcement. European markets finished higher, with London's FTSE gaining 1.21% and Germany's DAX jumping 2.95%. The euro rose against the greenback to $1.3818. The dollar index, a measure of the dollar's value against a basket of currencies, declined 0.44%. The benchmark 10-year Treasury was down 22/32, pushing the yield to 2.063%. David Song, currency analyst at Daily FX, noted that the euro struggled to hold ground after the ECB's announcement. "Bearish sentiment underlying the single currency is likely to gather pace in coming days, as the heightening turmoil in the euro-area bears down on investor confidence," he added. Song said he predicts more reliance on the central bank to stimulate the ailing economy as the risk of a double dip recession grows. In the U.S., economic data suggested a continued, albeit slow, recovery. The Labor Department reported that business productivity climbed 3.1% in the third quarter as employers tried to cut costs and squeeze more out of their existing workers. Economists expected productivity to increase 2.8% following a 0.7% drop in the second quarter. The latest read on initial weekly jobless claims dropped by 9,000 to 397,000, slightly better than economists expected. Weekly claims have been hovering above 400,000, so investors welcomed a reading below the threshold. Claims and a preliminary estimate from Automatic Processing Data on jobs gains in October have set a positive tone going into Friday's unemployment report.
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