Stocks jump for second day on hopes of Europe deal
Stocks surged Tuesday on hopes that European leaders are moving closer to a plan to contain that region's debt crisis. The Dow Jones industrial average jumped nearly 300 points, its biggest gain since late August.
Germany's chancellor Angela Merkel said her country would do whatever it could to help Greece regain investors' confidence. Greece's finance minister also said that country would receive the next round of bailout loans in time to avoid a default. Greece was at risk of running out of money by mid-October if it did not receive the funds.
"Europeans are finally starting to understand that they need to act with some force to get ahead of the European debt crisis," said John Briggs, a fixed-income strategist at RBS.
The Dow shot up 291 points, or 2.6 percent, to 11,335 as of 12:30 p.m. (1630 GMT). That's its biggest increase since Aug. 23. The Dow jumped 272 points on Monday and is heading for its third day of gains.
The gains were broad. Every one of the 30 stocks in the Dow average rose. Thirteen stocks rose for every one that fell on the New York Stock Exchange.
The Standard & Poor's 500 index rose 39, or 2.5 percent, to 1,192. Materials and energy shares led the S&P higher. Only 19 of the 500 stocks in the S&P 500 fell. Sears Holdings Corp. rose 12 percent, the most of any stock in the index.
The Nasdaq composite rose 61, or 2.4 percent, to 2,577.
European markets closed sharply higher.
The encouraging signs from Europe also sent commodities prices higher. Investors fear that a blowup in Europe's debt crisis could drag down economic growth across the globe. That would reduce demand for raw materials such as crude oil and copper.
Oil soared 4.1 percent, copper 4.7 percent. That helped the stocks of energy producers and mining companies. Freeport-McMoRan Copper & Gold Inc. rose 5.4 percent and Exxon Mobil Corp. rose 2.7 percent. Gold prices also surged 4 percent, after having plunged 9.6 percent last week.
Worries about Europe have weighed on the stock market for months. The S&P 500, a benchmark for many U.S. mutual funds, has fallen 7 percent over the past three months. It's down 5.3 percent for the year.
Analysts say more needs to be done to fight Europe's debt crisis. Finance ministers have been pushing to increase the size of Europe's rescue fund. Economists also want the European Central Bank to lower interest rates to help spur the economy.
President Barack Obama said in a town hall meeting Monday that Europe's financial crisis "is scaring the world" and that the actions the region's leaders have taken so far "haven't been as quick as they need to be."
The threat of another budget crisis in the U.S. was averted late Monday when the Senate passed legislation to avoid a government shutdown.
Home prices rose for a fourth straight month in most major U.S. cities in July. A report on Tuesday also showed that consumer confidence improved slightly in September after plummeting in August.
Walgreen Co. fell 4.4 percent, the most in the S&P, after the drugstore operator said it is ending its relationship with Express Scripts Inc. That deal is worth $5.3 billion per year, but Walgreen said Express Scripts was not paying it enough money to fill prescriptions.