U.S. stocks rise on Europe debt sales, Chinese growth

Question of the Day

Is it still considered bad form to talk politics during a social gathering?

View results

Slight improvements in Europe’s troubled debt markets and China’s economy were enough to send stocks sharply higher Tuesday. The Standard & Poor’s 500 index topped 1,300 for the first time since July 28, before the European debt crisis set off months of volatility.

The Dow Jones industrial average was up 125 points, or 1 percent, to 12,547 in midday trading. Only one of the 30 stocks in the Dow declined.

The Nasdaq composite index rose 31, or 1.1 percent, to 2,741.

The S&P 500 rose 11 points, or 0.9 percent, to 1,300 as of 12:20 p.m. EST, after rising as high as 1,303.

Debt auctions by Spain, Greece and Europe’s bailout fund drew solid interest from investors, easing fears that recent credit-rating downgrades would prevent them from obtaining funds. The downgrades have threatened to increase borrowing costs and intensify the region’s debt crisis.

The Chinese government said earlier that its economy slowed less dramatically in the fourth quarter than analysts had expected.

There’s so much money sitting in short-term accounts and earning zero return that even a shred of good news can jolt the market higher, said David Kelly, chief market strategist with J.P. Morgan Funds.

“The stock market is cheap, but cash and Treasurys are extremely expensive,” Mr. Kelly said. “That’s why even though people are busy taking money out of stocks and putting it into bond funds, they really should be doing the opposite.”

Bank stocks were mixed after several of them reported earnings. Wells Fargo & Co. rose 1.6 percent after its results beat Wall Street estimates as its lending business improved. Citigroup Inc. fell 6.7 percent, and M&T Bank Corp. fell 1 percent after its earnings fell short of estimates.

Carnival Corp. plunged 14 percent after a cruise ship owned by one of its brands capsized off the coast of Italy, killing 11 passengers. Italian prosecutors are charging the captain with manslaughter, causing a shipwreck and abandoning his ship before all passengers were evacuated.

Royal Caribbean Cruises Ltd. Co. fell 4 percent as analysts predicted ripple effects through the industry.

Overseas markets rose earlier Tuesday after Spain auctioned off billions in short-term debt at sharply lower interest rates, indicating strong demand for that nation’s bonds. Spain’s borrowing costs spiked in recent weeks on fears it would be engulfed by the crisis and default on its debts.

Standard & Poor’s downgraded Spain’s credit rating on Friday. The strong demand at the auction suggested that investors took the downgrade in stride.

Greece also auctioned off short-term debt on Tuesday at a lower rate than it had been paying. The fund to bail out Greece and other troubled nations also raised money, despite a downgrade on Monday.

The bailout fund’s credit rating is based on the ratings of the nations that contribute to it. It was downgraded because S&P had cut ratings for most of the nations that use the euro and back the fund.

Story Continues →

View Entire Story

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

blog comments powered by Disqus
TWT Video Picks