Spain’s reform plans help ease Wall St’s pain

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S&P 500 snapped a five-day string of declines in a broad-based rally yesterday, as Spain’s plans for economic reform eased some worries about one of the Eurozone’s most troubled countries.

The benchmark S&P 500 rose one per cent, its biggest percentage gain since the Federal Reserve announced its plan for a third round of stimulus on 13 September.

Spain announced a detailed timetable for economic reforms for the fiscally troubled nation and a tough 2013 budget based mostly on spending cuts.

“Any information that gives some understanding about what’s going to happen is good for the market. It’s small news, but more certainty is good,” said Giri Cherukuri, head trader at OakBrook Investments.

The EU’s Economic and Monetary Affairs Commissioner, Olli Rehn, said Spain’s detailed timetable for economic reforms goes beyond what the European Commission has asked of Spain. Rehn said it is an ambitious step forward.

Gold stocks ranked among the day’s bigger gainers in the wake of Spain’s news; the PHLX gold/silver index jumped 3 per cent.

Adding to the rally was a last-minute push by investors to reposition portfolios ahead of the quarter’s end, with the S&P 500 on track for a gain of 6.2 per cent in the third quarter. Friday will be the quarter's last trading day.

“What we’ve seen is broadly a consolidation, but also an attempt by fund managers to position properly for the rest of the year, to be in the best sectors,” said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.

The Dow Jones industrial average shot up 72.46 points, or 0.54 per cent, to 13,485.97 at the close. The Standard & Poor’s 500 Index rose 13.83 points, or 0.96 per cent, to finish at 1,447.15. The Nasdaq Composite Index gained 42.90 points, or 1.39 per cent, to close at 3,136.60.

While the Nasdaq led Thursday's gains, it also led the market’s declines earlier this week – its volatility possibly reflecting investors’ nervousness about the US economic outlook, analysts said.

Apple, up 2.4 per cent at $681.32, gave the biggest lift to the Nasdaq. The semiconductor index gained 2.3 percent, bolstering the Nasdaq 100. Intel was up 1.9 per cent at $23.09.

After the bell, US-listed shares of Research In Motion (RIM) surged 15 per cent to $8.21 after the Canadian maker of the BlackBerry reported a smaller-than-expected quarterly loss. In the regular session, the stock closed at $7.14 – up two per cent.

On the deal-making front, Tempur-Pedic International agreed to buy rival mattress maker Sealy for about $242m and assume about $750m in debt. Tempur-Pedic shares jumped 14.4 per cent to $30.64.