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The bulls made an emphatic return to Wall Street on Wednesday, fueling the Dow's first 250-point surge since early September as the markets’ worries about the euro, sovereign debt and global growth all eased considerably.
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The Dow Jones Industrial Average jumped 249.76 points, or 2.27%, to 11255.78, the Standard & Poor's 500 added 25.52 points, 2.16%, to 1206.07 and the Nasdaq Composite soared 51.20 points, or 2.05%, to 2549.43. The FOX 50 gained 17.37 points, or 2.05%, to 862.95.
Wall Street responded in dramatic fashion to a flurry of bullish developments, including a surge for the turbulent euro, relative calm in Europe's bond markets after days of fear, surprisingly strong manufacturing reports around the world and the biggest one-month rise in U.S. private-sector jobs in three years.
“It’s intriguing because if you were to catalogue everything that’s been wrong with the market for the last two weeks, we almost reversed all of them in a day,” said Art Hogan, chief market strategist at Jefferies & Co.
In another sign of the cooler heads on Wall Street, the VIX, or the markets so-called “fear gauge,” tumbled nearly 10%. Commodities also saw heavy buying as the markets' concerns about global growth easing faded. The bullish headlines took the attention away from Europe's sovereign debt crisis, which has kept global markets jittery for weeks.
“It feels like Groundhog Day. Sovereign debt concerns arise, the negativity increases, we go down for a couple of days and then things blow over,” said Michael James, managing director of equity trading at Wedbush Securities.
The blue chips enjoyed their largest point game since soaring 255 points on September 1. All 30 Dow stocks gained ground, led by economically-sensitive United Technologies (NYSE:UTX), Home Depot (NYSE:HD) and Alcoa (NYSE:AA). The benchmark index's worst performers were Cisco Systems (NASDAQ:CSCO) and Verizon (NYSE:VZ).
After slumping more than 1% on Tuesday, the Nasdaq Composite soared more than 2%. The index was lifted by big gains for tech stocks like Microsoft (NASDAQ:MSFT) and SanDisk (NASDAQ:SNDK).
The triple-digit rally marks a bullish kickoff to December and comes on the heels of 1.01% decline on the Dow in November, its first losing month since August.
While Wednesday's gains were certainly impressive, they only allowed Wall Street to recapture lost ground since mid-November. “We didn’t put a space suit and go to the moon today,” said Hogan.
Wall Street continues to closely track the path of the turbulent euro, which surged 1.15% to $1.3131. The currency rallied around upbeat economic data, chatter about an aggressive move on the way from the European Central Bank to soothe the near-panic in the markets, Portugal's successful 500 million euro bond auction and a report about possible U.S. aid for Europe. The euro held its gains even after the Treasury Department told FOX Business "an extra commitment" to the International Monetary Fund to help Europe is not "something we're discussing right now."
U.S. markets cheered the relative calm in Europe after days of fears that the sovereign debt crisis will continue to spread to larger economies like Portugal and Spain. Wall Street keeps a close eye on the euro because a stronger U.S. dollar tends to weigh on commodities and create a headwind for exports.
Economic Indicators Impress
The economic headlines were also largely positive on Wednesday, starting with a pair of purchasing manufacturing indexes in China soaring to seven-month highs in November. PMI's in Taiwan and South Korea also gained ground and the U.K.’s November manufacturing activity improved at the fastest pace in 15 years.
Stocks held their ground after the Institute for Supply Management said its U.S. manufacturing index came in at 56.6 in November, down just slightly from October's 56.9 reading. Economists had expected a slightly larger dip. Underscoring the enthusiasm for the manufacturing sector, big capital goods makers like Siemens (NYSE:SI) and Honeywell (NYSE:HON) saw heavy buying.
Wall Street also celebrated the ADP employment report, which showed U.S. private-sector jobs leaped by 93,000 in November -- the best one-month gain since November 2007. Economists had been calling for an increase of 64,000. ADP also nearly doubled its estimate for October job creation. The ADP report could be a bullish sign ahead of Friday’s more close-watched government jobs report, which is expected to reveal employers created 140,000 private-sector jobs in November.
“The ADP number really got the party started and it’s been nothing but fireworks since to the upside,” Ben Willis, a NYSE trader at Sunrise Securities, told FOX Business.
Also, the Commerce Department said U.S. construction spending jumped 0.7% in October, catching economists who had called for a 0.1% decline off guard. The government also upwardly revised its estimate for September spending.
Commodities responded well to the upbeat data, with economically-sensitive copper soaring 3.22% to $3.946 a pound. Crude oil jumped $2.64 a barrel, or 3.14%, to $86.75. Gold rose $2.30 a troy ounce, or 0.17%, to $1,387.30.
Auto makers also released upbeat sales results from November, highlighted by a 21% annual jump in core brand sales for General Motors (NYSE:GM) and a 24% rise for Ford (NYSE:F).
Amazon.com (NASDAQ:AMZN) ceased hosting a web site for controversial WikiLeaks, Sen. Joe Lieberman said. WikiLeaks made waves earlier this week by dumping thousands of classified documents that embarrassed the U.S.
GlaxoSmithKline (NYSE:GSK) is nearing a deal to buy China’s Nanjing MeiRui Pharma in an effort to boost its presence in the fast-growing Asian nation, The Wall Street Journal reported. The acquisition is likely to have a price tag in the low hundreds of millions of dollars and could be announced this month, the paper reported.
Deere (NYSE:DE) raised its dividend by 17% to 35 cents a share. The rate hike is Deere’s eighth since early 2004 and payable on February 1 to stockholders of record on December 31.
Chrysler said its U.S. sales climbed 17% in November from the year before, marking the eighth-straight increase.
The U.K.'s FTSE 100 soared 2.07% to 5642.50, Germany's DAX surged 2.66% to 6866.63 and France's CAC 40 rallied 1.63% to 3669.29.
In Asia, Japan's Nikkei 225 rose 0.51% to 9988.05, Hong Kong's Hang Seng jumped 1.05% to 23249.80 and China's Shanghai Composite gained 0.12% to 2823.45.