FOX Business: The Power to Prosper
The markets charged higher on Thursday on optimism global central bankers are making preparations to stave off the potential financial pressures that may follow the Greek elections.
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The Dow Jones Industrial Average rose 155 points, or 1.2%, to 12652, the S&P 500 climbed 14.2 points, or 1.1%, to 1329 and the Nasdaq Composite gained 17.7 points, or 0.63%, to 2836.
The markets have been fixated on Europe in recent sessions with the Greek election now taking place in days. The most recent development to capture Wall Street's attention was a report from Reuters that global central banks are preparing to take action to prevent contagion from spreading through financial markets following the Greek elections if it becomes necessary. The report cited unnamed G20 sources and the European Central Bank did not immediately return requests for comment on the matter.
The Bank of England is also working the the UK Treasury to help banks there that are suffering from the eurozone crisis, UK Chancellor of the Exchequer George Osborne said in a speech, according to multiple media reports. He said that more details would become available later in the day. The UK is not is not a member of the eurozone currency bloc, but is part of the broader European Union.
While the move sent a jolt through Wall Street, sending stocks lurching deep into positive territory, many market participants remained wary.
Scott Armiger, vice president and portfolio manager at Christiana Trust, said even if the moves come to fruition, they represent "the wrong medicine for the illness."
There have been fears for months that if Greece leaves the euro, which is a possible outcome of the elections, it will send shockwaves through already ailing European financial markets. In fact, Egan-Jones Ratings sliced France's credit rating to BBB+ from A-, citing concerns that Europe's No. 2 economy could see its borrowing costs rise and banks struggle.
Traders have also been paying close attention to Spain and Italy, seen as the next potential victims of the debt crisis. Spain saw its 10-year bond yield soar to a euro-era record high at 7% on the back of downgrades from Moody's Investor Service and Egan-Jones on Wednesday. The cost to insure the country's debt is also hovering about a record high, according to financial data company Markit.
Meanwhile, Italy was forced to pay 5.3% to borrow for three years at a bond auction Thursday, considerably higher than the 3.9% it paid a month ago. Still, Rome was able to sell its maximum allotment of $5.7 billion worth of the three-year and two other types of bonds on relatively strong demand.
The Euro Stoxx 50, which tracks eurozone blue chips, rose 0.22%.
Wall Street also received fresh data on the U.S. economy.
New claims for unemployment benefits rose to 386,000 last week from an upwardly revised 380,000 the week prior. Economists had been expecting claims to fall to 375,000 from a previously reported 377,000. The labor market has shown signs of weakness in recent months, with job creation slowing down considerably.
Inflation at the consumer level cooled down by 0.3% in May from April, led by plummeting energy prices, the Labor Department reported. It was the biggest drop since December 2008 and deeper than the 0.2% that was expected. Excluding the food and energy components, core prices were up 0.2%, which matched economists' expectations. The headline reading was up 1.7% from the same month last year, while the core prices have jumped 2.3%.
Analysts are paying especially close attention to these data since the Federal Reserve needs to balance the risk of inflation against the risk of economic headwinds when it makes its policy decision at its two-day meeting next week.
Energy futures advanced on the day after the Organization of Petroleum Exporting Countries held its production cap at 30 million barrels per day.
The benchmark crude oil contract traded in New York jumped $1.29, or 1.6%, to $83.91 a barrel. Wholesale New York Harbor gasoline rose 0.79% to $2.68 a gallon.
In metals, gold edged up by 20 cents, or 0.01%, $1,620 a troy ounce.
The Euro Stoxx 50 rose 0.22% to 2148, the English FTSE 100 dipped 0.31% to 5467 and the German DAX slumped 0.23% to 6139.
In Asia, the Japanese Nikkei 225 slipped 0.22% to 8569 and the Chinese Hang Seng sold off by 1.2% to 8808.