EU's backing of Greece, data boost Wall Street
NEW YORK – US stocks rose on Thursday after a pledge by European leaders to support debt-laden Greece eased fears of a broader euro zone crisis and upbeat data from China spurred mining and material stocks.
Data pointing to stabilization in the US labor market gave the market a further boost, along with a broker upgrade of bellwether 3M Co, whose stock rose 2.1%.
China, the world's top base metals consumer, reported a jump in lending and slower inflation, suggesting the economy is on track for growth. Caterpillar Inc, a big mining equipment maker, rose 5.6% to $56.15 and provided the biggest boost to the Dow industrials.
But the biggest driver in the nearly 1% rise on the day was the European Union pledge to support Greece. Investors saw an EU bid to avert fallout from fiscal troubles in Greece and other European single currency countries like Portugal and Spain.
"They moved everything up on more of a posture by the EU to come up with something creative on Greece as opposed to not knowing what to do," said Stephen Carl, principal and head of US Equity Trading at the Williams Capital Group in New York.
"It looks like they are putting things in place and the market is reacting favorably just because there is a plan. Let's see how they implement it."
The Dow Jones industrial average rose 105.81 points, or 1.05%, to 10,144.19. The Standard & Poor's 500 Index gained 10.34 points, or 0.97%, to 1,078.47. The Nasdaq Composite Index added 29.54 points, or 1.38%, at 2,177.41.
Before the bell a government report showed applications for jobless insurance fell more than expected in the latest week, a signal the labor market continues to mend.
Shares of 3M Co, a diversified manufacturer, rose 2.1% to $80.27 after Sanford C. Bernstein upgraded the company to "outperform" from "market-perform," citing better margins and a higher growth rate.
Among commodity related names, Alcoa Inc jumped 3.2% to $13.58, while US Steel Corp jumped 6% to $47.01 and Newmont Mining rose 3.2% to $46.76. The S&P materials index rose 1.6%.
On the Nasdaq, shares of video game publisher Activision Blizzard Inc jumped 9.6% to $11.07 after the company posted better-than-expected results and said it would start paying an annual dividend.
Shares of Philip Morris International Inc, a cigarette maker, jumped 4% to $48.67 after the company posted a stronger-than-expected fourth-quarter profit and announced a $12 billion share repurchase plan.
European leaders are keen to prevent Greece's problems spreading to other highly-indebted or high-deficit members of the euro zone, a development that could plunge the 16-nation bloc into a deeper debt crisis.
With the S&P 500 falling more than 7% from its 15-month closing peak of January 19 in recent days, investors had been looking for a major catalyst to spur a search for beaten-down stocks. Indeed, some of the day's best performers were some of the market's worst laggards in the past three weeks -- including technology, materials and energy sectors.
The S&P 500 is now only up 59.4% since its March 2009 bottom after having pulled back from a run-up of 70% since that significant low.
Volume was light on the New York Stock Exchange, with about 1.08 billion shares changing hands, well below last year's estimated daily average of 2.18 billion. But on the Nasdaq, about 2.15 billion shares traded, above last year's daily average of 1.63 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 7 to 2, while on the Nasdaq, about five stocks rose for every two that fell.