US stocks surged late in trading yesterday as buyers latched onto another report of agreements to strengthen the euro zone's rescue fund to bid up stocks aggressively.
All three major indexes rose sharply after the Guardian newspaper said France and Germany will increase the euro zone's rescue fund to €2 trillion as part of a plan to resolve the sovereign debt crisis.
Investors and buyers piled into financial shares, which had started the day weak but gained momentum on the late news. Shares of Bank of America rose 10.1 per cent to $6.64 and trading volume for the Direxion Financial Bull 3X ETF jumped to the highest since April 2010.
The development from Europe is “really what we had been rallying on for the past two weeks before Germany yesterday signaled that the issue wasn't quite resolved,” said Larry Peruzzi, senior equity trader at Cabrera Capital Markets in Boston.
“But the direction of the market can easily reverse if we get something bad again from Europe.”
Stocks may also be affected on Wednesday by last night’s late news from tech bellwether Apple.
Stock index futures sold off after the bell following weak quarterly results from Apple. Its shares lost more than five per cent to below $400 in extended trade after the company reported a rare miss in quarterly results after sales of its flagship iPhone fell short of Wall Street expectations. The stock had closed up 0.5 per cent at $422.24 during the regular session.
S&P 500 futures SPc1 fell 6.3 points while Nasdaq 100 futures NDc1 lost 18.75 points.
Goldman Sachs Group added 5.5 per cent to $102.25 after reporting a rare loss, but Goldman said it was moving to cut costs, including employee pay.