new York August 7, 2012, 1:53 IST
new York 08 07, 2012, 02:00 IST
U.S. stocks closed at three-month highs for the second day in a row on Monday, extending last week's rally on the hope for more assistance for the troubled euro zone.
The S&P 500 rose to its highest point since early May, but pared its gains going into the close. The benchmark index also failed to breach 1,400, a level that could spur further buying if convincingly broken. The S&P 500 hasn't closed above the 1,400 level since May 2.
Sentiment in Spanish and Italian bond markets - the forefront of the three-year debt crisis - improved, with two-year Spanish yields falling to 3.42 percent on Monday, less than half of a late July high of over 7 percent.
European Central Bank President Mario Draghi has said the ECB may buy short-dated bonds to lower borrowing costs to help Europe, which has been mired in a debt disaster. European shares closed at four-month highs.
"Nothing has been fixed in Europe, but things seem to be getting better, and it seems unlikely that there will be any kind of real blow-up," said John Manley, chief equity strategist at Wells Fargo Funds Management in New York. "I'm worried I may be too bearish."
Manley said he saw the S&P 500 trading in a range between 1,250 and 1,450, "which will likely persist for a while, with continued huge volatility."
Wall Street rallied on Friday with the S&P 500 marking its fourth straight week of gains on a strong U.S. jobs report and renewed hope that European authorities would act to contain the euro zone's debt crisis through ECB purchases of Italian and Spanish bonds.
Meanwhile, a group of investors will rescue embattled market maker Knight Capital Group Inc
The Dow Jones industrial average <.DJI> rose 21.34 points, or 0.16 percent, to 13,117.51 at the close. The Standard & Poor's 500 Index gained 3.24 points, or 0.23 percent, to 1,394.23. The Nasdaq Composite Index advanced 22.01 points, or 0.74 percent, to end at 2,989.91.
Material shares were the strongest for the day, with an S&P materials index climbing 1.1 percent on the improved sentiment regarding Europe. U.S. Steel
Utilities, considered a defensive play, were the day's weakest, with the S&P utilities index down 0.3 percent.
Cognizant Technology Solutions Corp
Of the 411 companies in the S&P 500 that have reported second-quarter earnings through Monday morning, 67.4 percent have reported earnings above analysts' expectations, near the four-quarter average of 68 percent, according to Thomson Reuters data.
About 60 percent of stocks traded on the New York Stock Exchange closed higher while on the Nasdaq, 59 percent of stocks closed higher.
Volume was light, with about 5.33 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year's daily average of 7.84 billion.
(Editing by Jan Paschal)