After moving sharply higher at the start of trading, stocks have continued to perform well throughout the trading day on Friday. The markets are benefiting from a particularly positive reaction to the latest developments in Europe.
The major averages have moved roughly sideways in recent trading, hovering near their best levels of the day. The Dow is up 219.22 points or 1.7 percent at 12,821.48, the Nasdaq is up 66.06 points or 2.3 percent at 2,915.55 and the S&P 500 is up 25.51 points or 1.9 percent at 1,354.55.
The rally on Wall Street comes 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.
Meanwhile, traders have largely shrugged off a mixed batch of U.S. economic data, including a report from Thomson Reuters and the University of Michigan showing that consumer sentiment deteriorated by even more than previously estimated in the month of June.
The report showed that the consumer sentiment index for June was downwardly revised to 73.2 from the mid-month reading of 74.1. With the downward revision, the consumer sentiment index is down sharply compared to the nearly five-year high of 79.3 seen in May.
A separate report from the Institute for Supply Management - Chicago showed that Chicago-area business activity saw a modest acceleration in the pace of growth in the month of June, with the Chicago business barometer inching up to 52.9 in June from 52.7 in May
Despite the strong upward moved by the broader markets, shares of Research in Motion (RIMM) have fallen sharply after the BlackBerry maker reported weaker than expected first quarter results and provided disappointing guidance. RIM is currently down by 17.9 percent.
With the news out of Europe generating optimism about global demand, steel stocks are posting substantial gains in mid-day trading. Reflecting the strength in the steel sector, the NYSE Arca Steel Index has surged up by 4.3 percent.
Significant strength is also visible among computer hardware stocks, as reflected by the 3.7 percent gain being posted by the NYSE Arca Computer Hardware Index. EMC Corp. (EMC) and Logitech (LOGI) are turning in two of the sector's best performances.
Networking, semiconductor, and software stocks are also showing strong moves to the upside, reflecting strength throughout the sector.
Most of the other major sectors have also moved notably higher, with defense, oil service, and housing stocks posting standout gains.
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 also moved sharply higher on the day. The U.K.'s FTSE 100 Index jumped by 1.4 percent, while the German DAX Index and the French CAC 40 Index soared 4.3 percent and 4.8 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 7 basis points at 1.647 percent.
by RTT Staff Writer
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