US stocks rose yesterday, bouncing back in late trading, as hopes that Italy could get financial support from China tempered investors’ worst fears over the Eurozone’s sovereign debt crisis.
Traders started the day braced for a possible downgrade of France’s top banks by Moody’s rating agency, but sentiment improved as various European officials succeeded in tamping down fears that political and financial leaders were losing control of the situation.
Italy has asked China to make “significant” purchases of Italian debt, the Financial Times reported.
“It shows the Chinese are serious about addressing the stresses in the marketplace,” said Robbert Van Batenburg, head of equity research at Louis Capital in New York.
Nasdaq led gains, with merger news helping to support tech shares. NetLogic Microsystems ended up 50.8 per cent at $48.12 per cent after wireless chipmaker Broadcom agreed to buy the company for about $3.7bn. Broadcom shares dipped 1.1 per cent to $33.06.
Besides technology, financials were among the best performers on the S&P 500. The S&P financial index gained 1.2 per cent.
Fears Europe’s credit crisis would drag on US banks have been pressuring financial stocks for months, sending some shares to two-year lows.
The Dow Jones industrial average finished up 68.99 points, or 0.63 per cent, at 11,061.12. The Standard & Poor’s 500 Index was up 8.04 points, or 0.70 per cent, at 1,162.27. The Nasdaq Composite Index ended 27.10 points higher, or 1.10 per cent, at 2,495.09.
The S&P 500 is down 13.6 per cent since 22 July, roughly when the recent market downtrend began. Much of the recent selling has been tied to worries over the Eurozone debt crisis.
In another sign leaders have stepped up action, Eurozone officials said US Treasury Secretary Timothy Geithner will attend a meeting of Eurozone finance ministers on Friday to show unity in the face of market turmoil and risks to growth.
A backdrop to the market’s early losses was a weekend meeting of the Group of Seven industrialised nations, which failed to come up with fresh proposals for boosting global growth.
Also weighing on stocks, Barclays Capital, citing “higher levels of economic uncertainty”, cut its full-year target for the S&P 500 stock index by about nine per cent to 1,325.
Volume was 8.3 billion shares on the NYSE, Amex and Nasdaq, above last year's average of roughly 7.6 billion.
Decliners still beat advancers on the NYSE by about 15 to 14, while advancers outpaced decliners on Nasdaq by about 7 to 6.