Dow Overcomes Euro Angst, Ends Higher
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The blue chips capped yet another furious, headline-driven trading session to the upside after news European policymakers could finalize a solution for the region's debt crisis as soon as next week lifted traders' spirits.
Today's Markets
The Dow Jones Industrial Average rose 37.2 points, or 0.32%, to 11,542, the S&P 500 gained 5.5 points, or 0.46%, to 1,215, and the Nasdaq Composite fell 5.4 points, or 0.21%, to 2,599.
Trading has been particularly ferocious over the past two weeks; indeed, the Dow has closed in opposing directions for ten-straight sessions.
Financials were the leader of the session, with big banks like JPMorgan (NYSE:JPM) posting sizeable gains. However, technology stocks performed poorly, helping to drag the tech-heavy Nasdaq into the red on the day.
Market participants are paying close attention to Europe, where policymakers are struggling to craft a unified solution to tackle the 17-member currency bloc's debt crisis. Indeed, the crisis seemed to be reaching a boiling point as violent protests against fresh austerity measure broke out across beleaguered Greece, and the spread between German debt and that of periphery nations edged higher ahead of the weekend summit. German bunds are seen as Europe's safe-haven assets, so when traders look to reduce risk, they would purchase bunds and sell other government securities, widening the spread.
However, France and Germany -- the region's economic superpowers -- said Thursday a solution for the debt crisis would be drafted on this weekend, and finalized no later than next week. While U.S. markets got a boost on the news, it came too late to help European markets that closed sharply to the downside.
The euro rose 0.2% to $1.38, while the dollar fell 0.18% against a basket of world currencies. Euro zone blue chips plunged 2.5% on Thursday.
"The European sovereign debt crisis affects investors everywhere," analysts at HSBC wrote in a research note, adding the crisis is "hugely complex."
Also on the European front, Greece's parliament approved fresh austerity measures that, while unpopular among the population, are key to getting fresh rescue aid that will help the ailing country stave off a bailout.
Data Dump
Several key economic reports were released on Thursday.
The manufacturing sector unexpectedly expanded in the mid-Atlantic region in early October. The Philadelphia Federal Reserve's manufacturing gauge jumped to 8.7 from -17.5. Reading above 0 point to expansion, while those below 0 point to contraction.
Sales of previously occupied homes fell 3% in September from August to a seasonally adjusted annual rate of 4.91 million homes, a bigger drop than the 2% economists anticipated. The housing market has struggled with a glut of supply, depressed prices, and still-tight consumer lending conditions.
New claims for unemployment benefits fell to 403,000 from 409,000 the week prior, but checked in higher than the 400,000 economists had been expecting. Claims have been hovering about the 400,000 level for months, and represent one of many gauges that suggest the labor market is still struggling.
Earnings in Focus
Earnings season is in full swing with almost half of all Dow components and more than 20% of the S&P 500 reporting this week.
American Express (NYSE:AXP) posted earnings that topped expectations, and sales that met forecasts. AT&T's (NYSE:T) quarterly revenue missed analysts' expectations, while its bottom-line matched estimates.
Technology heavyweight Microsoft (NASDAQ:MSFT) is set to report after the closing bell.
Also on the corporate front, Silver Lake Partners, Microsoft and others are working on a bid for struggling technology firm Yahoo! (NASDAQ:YHOO), the Wall Street Journal reported.
Energy markets were fairly tame on the day. Light, sweet crude fell 81 cents, or 0.94%, to $85.30 a barrel. Wholesale RBOB gasoline gained less than a penny to $2.68 a gallon.
In metals, gold dropped $34.10, or 0.94%, to $1,613 a troy ounce. Silver plunged $1.00, or 3.2%, to $30.28 a troy ounce.
Yields on government debt were slightly higher. The benchmark 10-year Treasury note yielded 2.205% from 2.164%. Bond yields move in the opposite direction of prices.
Foreign Markets
The Euro Stoxx 50 fell 2.5% to 2,271, the English FTSE 100 slid 1.2% to 5,385, and the German DAX dipped 2.5% to 5,766.
In Asia, the Japanese Nikkei 225 dropped 1% to 8,682 and the Chinese Hang Seng tumbled 1.8% to 18,983.