Stocks moved sharply higher at the start of trading on Friday, as traders reacted positively to the latest news out of Europe. The major averages showed strong moves to the upside after ending the previous session in the red.
The major averages have pulled back off their highs for the young session in the past few minutes but continue to post substantial gains. The Dow is up 175.36 points or 1.4 percent at 12,777.62, the Nasdaq is up 49.81 points or 1.8 percent at 2,899.30 and the S&P 500 is up 20.44 points or 1.5 percent at 1,349.48.
The early rally on Wall Street came after European Council President Herman Van Rompuy announced that European leaders have agreed to spend 120 billion euros on a package of measures to stimulate growth and create jobs.
Van Rompuy said the leaders also agreed to permit the European Financial Stability Facility and the European Stability Mechanism to directly recapitalize ailing banks after a single European banking regulator is commissioned.
Additionally, the leaders agreed that ESM loans to Spanish banks will not have senior creditor status. The European Central bank is set to act as an agent for the rescue funds in market operations.
Peter Boockvar, managing director at Miller Tabak, said, "The next question is whether the ESM/EFSF will have enough capital and assuming they don't, will the ECB chip in by giving it a bank license thus leveraging its size. That is yet to be determined."
"For now, party on and turn that hour glass over as more time has been bought but only the symptoms are being fought as the underlying disease of excessive debt and lack of growth still remains," he added.
Resource stocks are seeing substantial strength amid renewed optimism about the outlook for global demand. Steel stocks are posting particularly strong gains, resulting in a 3.7 percent advance by the NYSE Arca Steel Index.
Significant strength has also emerged among networking stocks, as reflected by the 2.8 percent gain being posted by the NYSE Arca Networking Index. Computer hardware, semiconductor, and financial stocks are also posting notable gains amid broad based buying interest.
In overseas trading, stock markets across the Asia-Pacific region showed strong moves to the upside during trading on Friday. Japan's Nikkei 225 Index advanced by 1.5 percent, while Hong Kong's Hang Seng Index surged up by 2.2 percent.
The major European markets have also moved sharply higher on the day. The U.K.'s FTSE 100 Index has jumped by 2 percent, while the French CAC 40 Index and the German DAX Index are soaring 3.5 percent and 3.6 percent, respectively.
In the bond market, treasuries have come under considerable pressure following the news out of Europe. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 8.3 basis points at 1.66 percent.
by RTT Staff Writer
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