US STOCKS rose yesterday as Europe’s progress toward bolstering its financial rescue fund brought more battle-weary investors back into the market.
Momentum buying was partly in play, analysts said, as investors tried to latch on, or catch up with, what they hoped was a lasting rally, which has been a rare trend this year.
The S&P 500 is up about 12 per cent from its intraday low hit last week on Tuesday and had its largest seven-day rally since March 2009. The Dow briefly bounced back into positive territory for the year.
“A lot of the people who have cash and who have been afraid of some of these big, macro risks are thinking: Maybe we should get back in because this has been a rough year, and it would be really rough if we missed a big fourth quarter,” said Hank Smith, chief investment officer of Haverford Trust in Philadelphia.
Bank shares led the advance again, with the KBW Bank Index up 3.3 per cent. Citigroup gained five per cent to $29.22.
The Dow Jones Transportation Average rose 1.3 per cent.
Worries that the Eurozone debt crisis could tip the global economy into another recession have pressured stocks in recent months.
Slovak lawmakers struck a deal to ratify more powers for the Eurozone’s rescue fund, known as the EFSF, effectively ending a crisis that had threatened the euro’s survival and has weighed on stocks and other risky assets for months.
Slovakia is the last country in the 17-member currency zone left to approve the revamped EFSF.
The Dow Jones industrial average rose 102.55 points, or 0.90 per cent, to end at 11,518.85. The S&P 500 gained 11.71 points, or 0.98 per cent, to 1,207.25. The Nasdaq shot up 21.70 points, or 0.84 per cent, to close at 2,604.73.
The S&P 500 traded above 1,200 for the first time in three weeks, taking the benchmark near the upper end of a range it has been stuck at since early August.
A sustained break above resistance at 1,215 would be seen as a bullish signal, analysts said.
On the earnings front, PepsiCo rose 2.9 per cent to $62.70 after it reported slightly better-than-expected earnings and affirmed its full-year target. But Alcoa fell 2.4 per cent to $10.05 and ranked as one of the biggest drags on the Dow, a day after reporting results.