US stocks rose for a third day yesterday on efforts by Eurozone officials to solidify the region’s rescue fund and alleviate a sovereign debt crisis, boosting optimism.
But equities ended off their highs for the day after a report suggested cracks were emerging in a previously agreed deal to tackle the crisis.
A successful solution to Europe’s sovereign debt crisis would take the pressure off banks worried about funding and remove a threat to economic growth. Rising hopes for an agreement have helped push the S&P 500 up more than four per cent since Thursday’s close.
The Dow Jones industrial average finished up 146.83 points, or 1.33 per cent, at 11,190.69. The Standard & Poor’s 500 Index was up 12.44 points, or 1.07 per cent, at 1,175.39. The Nasdaq Composite Index was up 30.14 points, or 1.2 per cent, at 2,546.83.
The S&P materials index was up 2.1 per cent and an S&P index of energy stocks added 1.5 per cent as commodity prices rallied on hopes of a solution in Europe. Mining and energy shares were the top performers among large-cap stocks.
While European officials have considered various approaches to maximize the bailout fund and to recapitalize banks, substantial political hurdles to sealing the deal remain.
Market volatility could remain high as traders react to headlines and attempt to gauge the commitment of governments and institutions as they work to prevent a Greek default. US equities have been highly sensitive to Europe’s debt issues in recent weeks.
The S&P has gained 3.4 per cent so far this week, after losing 6.5 per cent on European-led fears the previous week. That week was also the Dow's worst since October 2008 during the thick of the financial crisis.
Stocks also got a boost as investors rebalanced their portfolios in the last days of the quarter. The wide gap in performance between equities and bonds, favoring government debt so far this quarter, may partly reverse.
“All these end-of-quarter issues are amplifying the moves that we’ve been seeing in stocks,” said Paul Simon, chief investment officer at Tactical Allocation. “I don’t have a lot of faith in the moves we’ve been seeing.”
Accenture, a tech services company, rose 3.5 per cent in extended trading after the market’s close and it reported quarterly earnings that beat expectations.
Research in Motion surged 4.5 per cent on speculation that investor Carl Icahn had taken a stake in the firm.