Wall Street Shifts Back Into Rally Mode
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The markets rallied in afternoon trading on Wednesday after euro zone officials released specific details on how the bloc intends on stemming its sovereign debt crisis.
Today's Markets
As of 3:00 p.m. ET, the Dow Jones Industrial Average gained 129 points, or 1.1%, to 11,837, the S&P 500 rose 9.7 points, or 0.79%, to 1,239 and the Nasdaq Composite gained 5.1 points, or 0.19%, to 2,644.
Traders had a slew of corporate and economic news to mull over on Wednesday in addition to continuing developments on Europe's debt crisis.
European policymakers that have been working to hash out a plan to stem the region's worsening crisis that is threatening to spread from small economies like Greece, to larger ones, such as Italy met on Wednesday in Brussels.
The group agreed on leveraging the region's bailout fund, called the European Financial Stability Facility "several fold," Reuters reported, citing a draft released Wednesday afternoon. Leveraging the EFSF is crucial in increasing its firepower, and making it a robust enough entity to tackle the crisis in Greece, and other euro zone countries, should the need arise. Utilizing leverage has been a major point of contention among many governments. The fund may grow as big as 1 trillion euro after its leveraged -- more than double its un-leveraged size -- Reuters reported, quoting unnamed sources.
Additionally, the draft said the EFSF can act as a risk insurance and special purpose vehicle, further ramping up its usefulness in providing rescues. Separately, German Chancellor Angela Merkel said the European Union is ready to negotiate with banks in crafting a bailout for Greece that would avert an uncontrolled default that may put financial markets in peril.
Still, any plan will need to be approved by the parliaments of all 17 countries in the bloc, where varying political tensions have come into play. Germany -- Europe's economic powerhouse -- has been pushing to reduce its involvement in sovereign bailouts, while at the same time emphasizing the importance of the euro. However, the country's parliament did pass measures that enable the region's bailout fund to utilize leverage on Wednesday.
European markets were down modestly on the day, but closed before the summit concluded. The euro dipped 0.01% to $1.39 in particularly choppy trading. The dollar rose 0.38% against a basket of six world currencies.
Boeing (NYSE:BA) unveiled third-quarter profits of $1.1 billion, more than the $837 million it earned in the same period the year prior, and higher than Wall Street forecast. Shares of the aircraft maker flew higher, leading the Dow by a wide margin.
Ford (NYSE:F) posted third-quarter profits that were less than it earned in the same period last year, but higher than analysts anticipated.
MF Global Holdings (NYSE:MF) has hired an investment bank Evercore Partners (NYSE:EVR) to look into a possible sale, merger, or other strategic options as the company looks to stem its plunging shares, according to a report by The Wall Street Journal.
Financial and energy shares were performing the best, while consumer-driven issues like Nordstrom (NYSE:JWN) struggled.
Durable Goods, Home Sales Data Top Expectations
On the economic front, orders for long-lasting goods fell by 0.8% in September, a shallower loss than the 0.9% economists forecast. Excluding the transportation component, orders were actually up 1.7%, much bigger than the 0.4% rise that was anticipated.
The report is important for the manufacturing sector, and could impact a wide swath of companies from Caterpillar (NYSE:CAT) to Apple (NASDAQ:AAPL).
New sales of single-family hopes jumped 5.7% to an annualized rate of 313,000 units in September. Economists expected a smaller increase to 300,000. While supply fell to the lowest level since last April, median home prices are off 10.4% from September of last year.
Demand for housing has remained anemic as a result of stubbornly-tight lending conditions, beaten down consumer confidence, and a glut of available supply on the market.
Energy markets were lower on a bearish inventory report. The Energy Department reported crude oil stocks increased nearly four times more than expected last week, while gasoline draws were slightly shallower than expected. Higher supplies can point to lower overall demand for energy, putting pressure on prices.
Light, sweet crude fell $2.97, or 3.2%, to $90.20 a barrel. Wholesale RBOB gasoline fell 5 cents, or 1.8%, to $2.65 a gallon.
Gold jumped for its forth-straight session. The precious metal climbed $23.10, or 1.4%, to $1,724 a troy ounce. The yield on U.S. government debt moved higher. The benchmark 10-year Treasury note yields 2.160% from 2.116%.
Corporate News
Amazon.com (NASDAQ:AMZN) revealed quarterly results that were well short of analysts' expectations on the top and bottom line after the closing bell on Tuesday. Shares of the largest online retailer plunged 10% on the report.
Nokia (NYSE:NOK) unveiled phones powered by Microsoft's (NASDAQ:MSFT) mobile operating system as the Finland-based company looks to compete with other smartphones powered by Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) software.
Foreign Markets
European blue chips fell 0.38%, the English FTSE 100 rose 0.5% to 5,553 and the German DAX slipped 0.51% to 6,016.
In Asia, the Japanese Nikkei 225 fell 0.16% to 8,748 and the Chinese Hang Seng climbed 0.52% to 19,067.