Wall St extends rally on Europe hopes

MARKETS-USA-STOCKS-OPEN:Wall St extends rally on Europe hopes

new York  August 6, 2012, 21:13 IST

new York  08 06, 2012, 21:20 IST

 

U.S. stocks hit a three-month high on Monday as traders remained optimistic that the European Central Bank would follow through on its plan to lower borrowing costs in Spain and Italy.

The S&P 500 was trading at its highest since early May, near the 1,400 level. A break above that level could boost investor confidence.

Contributing to the perception of better sentiment on Europe, inspectors from the International Monetary Fund, the European Commission and the ECB concluded a visit to Greece on Sunday saying the talks with the new coalition government were productive.

Spain's Economy Minister Luis de Guindos told a Spanish newspaper that his country had covered its debts for the year and was able to wait for further details of a European rescue package.

Meanwhile, a group of investors will rescue embattled market maker Knight Capital Group Inc in a $400 million deal that keeps the company in business, Knight said on Monday, but it comes at a huge cost to investors. Knight shares fell 23.5 percent to $3.09.

"Overnight, the international markets were on firmer footing. We had some positive news coming out of Greece, we're making some progress there, the bonds did okay, and although Knight Capital is down today, there is a little bit of relief that another large broker-dealer didn't shut its doors," said Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc in Boston.

"There was nothing to reverse the progress that we made Friday."

Wall Street rallied on Friday with the S&P 500 closing its fourth straight week of gains on a strong U.S. jobs report and renewed hope European authorities would act to contain the euro zone crisis through ECB purchases of Italian and Spanish bonds.

The Dow Jones industrial average gained 78.29 points, or 0.60 percent, to 13,174.46. The Standard & Poor's 500 Index gained 7.47 points, or 0.54 percent, to 1,398.46. The Nasdaq Composite Index gained 23.87 points, or 0.80 percent, to 2,991.77.

Best Buy shares jumped 14.6 percent to $20.22 after founder and former Chairman Richard Schulze offered to buy the shares he does not already own in the electronics retailer for $24 to $26 each.

Cognizant Technology Solutions Corp shares rose 12 percent to $64.80 after the information technology services provider raised its full-year adjusted profit forecast.

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 analyst expectations, near the four-quarter average of 68 percent, according to Thomson Reuters data.