U.S. stocks rally on European agreements
NEW YORK (MarketWatch) -- U.S. stocks leapt on Friday, with the Dow Jones Industrial Average posting its best month of the year, after Europe agreed on steps to bolster the economies of its more troubled nations.
The European Union summit in Brussels had policy makers agreeing to relax repayment conditions for Spanish banks and to lower the bar to possible aid to Italy, along with proposing a $149 billion economic-growth plan for the region.
"'Let's throw more money at it' is essentially their plan, and, 'Hopefully we'll be in a better position to pay it back at some date in the future.' It's making people feel like they got something, but it doesn't really address the problem," said Robert Pavlik, chief market strategist at Banyan Partners.
"It's a minor good thing; the amount of money they'll be paying to borrow is reduced, and the potential for default is reduced, but it just addresses the near short-term issue," added Pavlik, who believes the European Union needs economic reforms to address the underlying causes.
"The corruption and backwards way of doing things in these countries is part of what led up to this, with people avoiding paying taxes and no communication within departments of governments."
The Dow Jones Industrial Average
(DJIA)
rose 277.83 points, or 2.2%, to 12,880.09, with
The blue-chip index is up 1.9% for the week; up 3.9% for the month; off 2.5% for the quarter; and up 5.4% for the year.
The S&P 500 Index (SPX) added 33.12 points, or 2.5%, to 1,362.16, with industrials faring best among its 10 major sectors. The index is up 2% for the week; up 4% for June; off 3.3% for the quarter; and up 8.3% year-to-date.
The Nasdaq Composite (COMP) climbed 85.56 points, or 3%, to 2,935.05. The index is up 1.5% for the week; up 3.8% for June; down 5.1% for the quarter; and up nearly 13% year-to date.
For every stock falling nearly seven gained on the New York Stock Exchange, where about 1.1 billion shares traded. Composite volume topped 4.5 billion.
A day after falling to an eight-month low, crude-oil futures (CLQ2) rose $7.27 to $83.96 a barrel on the belief that help for Europe's debt troubles would remove one barrier to global economic growth.
Gold futures (GCQ2) climbed $53.80 to $1,604.20 an ounce.
The euro (EURUSD) gained against other currencies, including the dollar. U.S. Treasury prices slid, with the yield on the 10-year note (10_YEAR) rising to 1.658%.
Enthusiasm for equities and other assets continued after economic data had consumer spending holding flat in May and consumer sentiment falling in June.
"The recovery has weakened, consumer spending is still growing, but not at the same pace as it was earlier this year," said Scott Hoyt, senior director of consumer economics at Moody's Analytics.
"We're cautiously optimistic that some of the drivers of the weakness appear to be fading away," said Hoyt, who cites the increase in oil and gasoline prices that took place earlier in the year, and the warmer winter that appeared to have shifted both hiring and spending forward.
"Presumably those effects should be waning. Corporations are flush with cash, and consumers clearly have a lot of pent-up demand since spending has been so slow for so long, so we think there is potential," Hoyt said.
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