Dow Jones: 11,577.05 (+180.05) Nasdaq: 2,657.43 (+42.51) SP 500: 1,225.38 (+24.52)US STOCKS gained yesterday, sending the Standard and Poor's 500 Index to the highest level since August, as Bank of America paced a rally in financial shares and optimism grew over progress on expanding Europe's rescue fund.
Stocks surged late in trading as buyers latched on to another report of agreements to strengthen the euro zone’s rescue fund to bid up stocks aggressively.
A gauge of homebuilders in S&P indexes jumped 9.6 per cent, the most since March 2009, as data showed that industry sentiment increased more than forecast. Caterpillar and Alcoa added at least 3.9 per cent, pacing gains among companies most-tied to the economy.
All three major indexes rose sharply after a Guardiannewspaper report said that France and Germany would increase the euro zone's rescue fund to €2 trillion as part of a plan to resolve the sovereign debt crisis.
Investors and buyers piled into financial shares, which had started the day weak but gained momentum on the late news. Shares of Bank of America rose 10.1 per cent to $6.64 and trading volume for the Direxion Financial Bull 3X ETF jumped to the highest since April 2010. The KBW bank index advanced 5.6 per cent.
Bank of America shares had been lower after it reported a third-quarter profit but showed its main businesses struggled as income from lending and investment banking fell.
Goldman Sachs Group added 5.5 per cent to $102.25 after reporting a rare loss, but Goldman said it was moving to cut costs, including employee pay.
Trading picked up shortly after the Guardian report, with 2.9 billion shares exchanging hands in the final hour on the New York Stock Exchange, NYSE Amex and Nasdaq. On the day 8.8 billion shares traded, above the year’s daily average so far of about 8 billion.
The Dow Jones industrial average was up 1.58 per cent, the SP 500 gained 2.04 per cent and the Nasdaq rose 1.63 per cent.
The CBOE Volatility Index VIX, Wall Street’s “fear gauge”, was down nearly 5 per cent but still remained elevated above 30.
US homebuilder stocks were helped by strong homebuilder data, signalling improvement in the housing market. Shares of KB Home rose 11.6 per cent to $7.02. – (Reuters/ Bloomberg)
