NEW YORK (AP) â¿¿ Encouraging signs out of Europe and a surprisingly strong report on the U.S. housing market drove the Dow Jones industrial average up more than 300 points Tuesday. It was the best day for stocks this month.
The Spanish government pulled off a successful debt auction and gauges of business and consumer confidence in Germany rose unexpectedly. Both helped ease worries about Europe's debt crisis. The dollar fell against the euro and U.S. government bond prices dropped as traders shifted money out of the safest assets.
Borrowing costs for the Spanish government plunged at an auction of short-term debt, a sign that bond buyers are more confident in the country's ability to pay them back."Spain has plenty of problems, large debts and budget deficits," said Sam Stovall, chief equity strategist at S&P Capital IQ. "So when we see debt auctions go much better than expected it's very encouraging." Spain's government raised â¿¬5.6 billion ($7.3 billion), much more than its goal of â¿¬4.5 billion. Investors demanded an interest rate of only 1.74 percent to lend to Spain for three months, a steep fall from the 5.1 percent at an auction in November. The Dow gained 337.32 points, or 2.9 percent to close at 12,103.58. It lost 100 points the day before. Europe's major stock markets also climbed. Germany's DAX soared 3.1 percent. France's CAC-40 jumped 2.7 percent. The gains held on Tuesday afternoon even after the U.S. House of Representatives rejected a plan to extend a cut in Social Security taxes. Unemployment benefits for 2 million people are also at risk. A Federal Reserve proposal for stricter rules on larger banks didn't knock down JPMorgan Chase, Citigroup and other big bank stocks. JPMorgan Chase & Co. gained 4.9 percent. Citigroup added 4.6 percent. The Standard & Poor's 500 index gained 35.95 points, or 3 percent, to 1,241.30. Only six stocks in the index fell. The Nasdaq composite index rose 80.59, or 3.2 percent, to 2,603.73.