Stocks Rally on European Developments
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Wall Street was in rally mode for a second-straight day after the European Central Bank unexpectedly sliced its main interest rate, and traders paid close attention to developments from Greece.
Today's Markets
As of 9:32 a.m. ET, the Dow Jones Industrial Average jumped 137 points, or 1.2%, to 11,971, the S&P 500 gained 12.7 points, or 1%, 1,250 and the Nasdaq Composite climbed 23.1 points, or 0.88%, to 2,663.
It has been yet another tumultuous week for Wall Street: the blue chips sold off by nearly 600 points in the first two sessions, just to post a 178-point rally on Wednesday. All eyes have turned to Europe, where leaders are racing to put out fresh fires that threaten to hinder bloc's response to its two-year-old sovereign debt crisis.
The European Central Bank sliced its refinancing rate -- a key interest rate -- by 0.25 percentage points to 1.25% on Thursday in an unexpected move. The ECB has has been weighing concerns the European debt crisis are escalating with worries low interest rates may lead to higher levels of inflation. Mario Draghi has just taken the reins at the ECB from Jean-Claude Trichet, who held the presidency for 8 years.
Greek Prime Minister George Papandreou Tuesday called for a referendum on the rescue aid as the Greek public has violently protested many of the austerity measures international lenders have pushed for as a condition of the bailout. A 'no' vote in the referendum, analysts say, could leave the highly-indebted country with no other choice but to default when its next bond payment comes due next month -- a move that could damage larger economies, and slam the global financial system.
Pressure heated up on Thursday for Papandreou. The BBC reported that Papandreou may imminently resign, paving the way for a unity coalition run by Lucas Papademus, a former governor of the Bank of Greece. Potentially, the collapse of the government may mean the referendum will not occur, which some market participants have seen as a relatively stabilizing development. However, state television in Greece said roughly an hour later that Papandreou won't resign, according to Dow Jones Newswires.
"The Greek attempts to play hardball are being very squarely rebutted and it's increasingly difficult to see what relevance the referendum will now play other than as a bargaining chip," Will Hedden, a trader at London-based IG Index wrote in an e-mail.
European blue chips rose 0.83%, while the euro gained 0.37% to $1.38.
The U.S. economy is also coming squarely into focus, with a slew of important economic data slated for release during the latter part of the week.
New claims for unemployment benefits fell to 397,000 last week from 406,000 the week prior. Economists were predicting a drop to 400,000. The more closely-watched monthly unemployment report is on tap for Friday, and is expected to show the unemployment rate stuck at 9.1% as the economy has struggled to add jobs in light of strong headwinds.
Later in the morning, traders will get fresh data on the services sector, which is expected to have expanded at a slightly quicker rate in October than in September, and on factory orders from September.
Energy futures were higher in morning trading. Light, sweet crude rose $1.19, or 1.2%, to $93.65 a barrel. Wholesale RBOB gasoline gained 1 cent, or 0.16%, to $2.62 a gallon.
Gold jumped $16.80, or 0.91%, to $1746 a troy ounce. Yields on government debt ticked higher. The 10-year Treasury note yields 2.02% from 1.987%.
Foreign Markets
European blue chips rose 2.9% to 2,358, the English FTSE 100 rose 1.2% to 5,552 and the German DAX jumped 3.1% to 6,148.
In Asia, the Japanese Nikkei 225 dropped 2.2% to 8,640 and the Chinese Hang Seng tumbled 2.5% to 19,243.