Euro Enthusiasm Excites Wall Street; Dow Leaps 186 Points

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U.S. stocks soared into the weekend on Friday as Wall Street cheered crucial progress in the eurozone to move the embattled currency union in the direction of a much-needed fiscal marriage.

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Today's Markets

The Dow Jones Industrial Average jumped 186.56 points, or 1.55%, to 12,184.26, the S&P 500 rallied 20.84 points, or 1.69%, to 1,255.19 and the Nasdaq Composite climbed 50.47 points, or 1.94%, to 2,646.85

The bullish sentiment, which was fueled by a deal forged in a key summit in Brussels, underscores just how worried the global financial markets have been about the two-year-old European sovereign debt crisis. The triple-digit rally nearly wiped out Thursday's 199-point tumble and left the blue chips in the green for the fourth day of the past five.

Financial stocks, which have been slammed by the debt crisis, fared the best, but every major sector closed higher. In a sign of the depth of the rally, 29 of 30 blue chips advanced, while only about half of the S&P 500 components were to the downside. Volatility, as tracked by the CBOE's VIX, retreated more than 11%.

Investors fled the safety of U.S. government debt, shoving yields higher. The benchmark 10-year Treasury rose to 2.056% from 1.972%.

The surge in risk appetite was fueled by progress at the crucial summit in Brussels. Every European Union country besides Great Britain agreed to tighter fiscal supervision that is designed to keep governments from amassing high public-debt loads and causing a repeat of the crisis that the bloc has been struggling with for two years. However, the pact left Great Britain isolated, with Prime Minister David Cameron vetoing the measures.

Still, European Central Bank chief Mario Draghi called the deal "a very good outcome." The ECB's reaction was being closely watched by market participants who are hoping the central bank might unveil measures to help ease the crisis if countries agree to keep their deficits in check. However, comments from Draghi on Thursday called into question whether that can legitimately occur.

"European officials have struck what appears to be a significant, even if still shy of a comprehensive agreement that moves the money union to greater fiscal coordination," Marc Chandler, global head of currency strategy at Brown Brothers Harriman, wrote in a note.

The European policymakers also said they will aim to bring the new bailout fund, called the European Stability Mechanism, online in July 2012, bringing the combined rescue power to roughly 500 billion euros.

European blue chips soared 2.2%, while the euro rose 0.2% to $1.3367. Conversely, the closely-watched yield on Italian 10-year bonds topped the painful 7%, while the premium investors demand to buy that country's debt over safe-haven German bunds rose above 5 percentage points.

On the corporate front, General Electric (NYSE:GE) upped its dividend by 2 cents to 15 cents. On the other hand, several high-profile companies slashed their profit outlooks.

Dow component DuPont (NYSE:DD) cut its full-year 2011 outlook to $3.87 to $3.95 a share from a range of $3.97 to $4.05, excluding one-time items. The conglomerate blamed the move on a slew of factors, including softening demand for consumer electronics and a weak construction and housing market.

Similarly, chip maker Texas Instruments (NYSE:TXN) slashed its fourth-quarter sales and profit guidance after the close of trading on Thursday.

Wall Street also received fresh U.S. trade and consumer sentiment data on Friday. The trade deficit fell to $43.47 billion in October from $44.17 billion the month prior. The deficit is now at its narrowest point since December 2010. The smaller the deficit, the less it detracts from broader measures of economic growth.

A preliminary reading on consumer sentiment for the month of December checked in at 67.7, higher than a final November reading of 64.1 and topping economists' estimates of 65.5. Sentiment is particularly crucial as the key holiday shopping season ramps up.

Energy markets closed on the upside. The benchmark crude oil contract traded in New York climbed $1.07, or 1.1%, to $99.41 a barrel. Wholesale RBOB gasoline gained 1.2% to $2.596 a gallon. In metals, gold climbed $3.40, or 0.2%, to $1,717 a troy ounce.

Foreign Markets

European blue chips soared 2.2%, the English FTSE 100 gained 0.69% to 5,521 and the German DAX jumped 1.7% to 5,975.

In Asia, the Japanese Nikkei 225 slid 1.5% to 8,536 and the Chinese Hang Seng tumbled 2.7% to 18,586.

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