US stocks closed at three-month highs for the second day in a row yesterday, extending last week’s rally on the hope for more assistance for the troubled Eurozone.
The S&P 500 rose to its highest point since early May, but pared its gains going into the close. The benchmark index also failed to breach 1,400, a level that could spur further buying if convincingly broken. The S&P 500 hasn’t closed above the 1,400 level since 2 May.
Sentiment in Spanish and Italian bond markets – the forefront of the three-year debt crisis – improved, with two-year Spanish yields falling to 3.42 per cent on Monday, less than half of a late July high of over seven per cent.
European Central Bank president Mario Draghi has said the ECB may buy short-dated bonds to lower borrowing costs to help Europe, which has been mired in a debt disaster. European shares closed at four-month highs.
“Nothing has been fixed in Europe, but things seem to be getting better, and it seems unlikely that there will be any kind of real blow-up,” said John Manley, of Wells Fargo Funds Management in New York. “I’m worried I may be too bearish.”
The Dow Jones industrial average rose 21.34 points, or 0.16 per cent, to 13,117.51 at the close. The Standard & Poor’s 500 Index gained 3.24 points, or 0.23 per cent, to 1,394.23. The Nasdaq Composite Index advanced 22.01 points, or 0.74 per cent, to end at 2,989.91.
Material shares were the strongest for the day, with US Steel surging 5.6 per cent to $22.94 and Newmont Mining added 3.3 per cent to $46.12.