FOX Business: The Power to Prosper
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The blue chips enjoyed a triple-digit rally and the Nasdaq Composite advanced another 1% Wednesday morning as Wall Street cheers new signs Slovakia will approve a 440 billion euro rescue fund and traders display optimism about earnings season.
As of 11:36 a.m. ET, the Dow Jones Industrial Average jumped 127.98 points, or 1.12%, to 11546.17, the Standard & Poor's 500 gained 17.78 points, or 1.49%, to 1213.32 and the Nasdaq Composite leaped 37.64 points, or 1.47%, to 2620.83. The FOX 50 added 12.69 points, or 1.45%, to 887.14.
The early bullishness comes after the markets mostly paused on Tuesday, preserving their big October rally and 330-point Columbus Day surge. The blue chips have leaped more than 7% since falling to their 2011 lows on October 3, while the Nasdaq Composite has jumped about 11% over that span.
Some were surprised Wall Street managed to open in the green on Wednesday given Alcoa's (AA) earnings dud and Slovakia's initial rejection of the euro-zone rescue fund.
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“I think that’s a testament to the shift in investor psychology in a week’s time frame. If this had hit a week ago, we wouldn’t have seen the strength we started off with,” said Michael James, managing director of equity trading at Wedbush Securities. “The market continues to be dominated by traders and trader sentiment. As we’ve seen, that sentiment can shift from bearish to bullish in a pretty short time frame.”
U.S. stocks hit session highs after the Slovak opposition leader said it has reached a deal to ratify the $600 billion rescue fund that is seen at stabilizing Europe's debt debacle. The comments come after the Slovak Parliament rejected the measure, which has been passed by 16 of the 17 euro-zone nations.
Underscoring expectations the bailout will eventually be approved, the euro rallied 1.2% to one-month highs against the dollar and European banks like Deutsche Bank (DB) advanced. In fact, the KBW Banking Index soared about 3%, doubling the broader markets' gains.
Votes in favor of the stronger rescue fund and pledges to recapitalize the continent's banks have sent global stocks soaring in recent days.
“Expectations for backstopping of European financials have made people feel a little more optimistic that the downside has been somewhat contained in Europe,” said James.
Wall Street managed to shrug off Alcoa's disappointing start to earnings season as the aluminum maker disclosed a third-quarter profit of 15 cents a share, widely missing forecasts for 22 cents. Alcoa, which is traditionally the first major U.S. company to report results, did post stronger-than-expected revenue growth of 21% to $6.4 billion.
The markets have turned their attention toward key earnings reports on Thursday from banking giant JPMorgan Chase (JPM) and search titan Google (GOOG). Beverage and food giant PepsiCo (PEP) also posted stronger-than-expected results on Wednesday.
In the commodities complex, crude oil slipped 4 cents a barrel, or 0.05%, to $85.97. Gold jumped $18.80 a troy ounce, or 1.13%, to $1,679.80.
PepsiCo (PEP) narrowly surpassed estimates with a non-GAAP profit of $1.31 a share on a 13% rise in revenue to $17.58 billion. The food and beverage giant also backed its 2011 EPS growth target.
Research in Motion’s (RIMM) BlackBerry outage has spread to North and South America, deepening a third day of disruptions for the struggling company. Outages have been reported in the Middle East, Africa, Brazil, Chile and Argentina.
Liz Claiborne (LIZ) leaped more than 30% after saying it has unloaded its namesake and Monet jewelry brands to J.C. Penney (JCP) in a $267.5 million deal. Liz Claiborne said it is also exploring options for a new name.
London's FTSE 100 gained 0.48% to 5421.48, Germany's DAX jumped 1.34% to 5943.42 and France's CAC 40 rallied 1.50% to 3200.70.
In Asia, the Japanese Nikkei 225 fell 0.40% to 8738.90 and Hong Kong's Hang Seng leaped 1.04% to 18329.50.