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Stocks jumps on hopes of fix for European debt
NEW YORK -- Stocks had their biggest gains in more than two weeks Monday after European officials vowed to take action to resolve the region's debt problems. The Dow Jones industrial average jumped 272 points, making up about a third of last week's losses.
Financial officials met in Washington this weekend and pledged to take bolder steps to fight Europe's debt crisis, which threatens to slow the global economy. President Barack Obama called on European leaders to move more quickly to address the crisis.
German leaders want banks and private institutions that hold Greek bonds to take a bigger loss on those holdings to reduce Greece's debt burden. European officials have talked about increasing the size of Europe's $595 billion rescue fund by allowing it to take loans from the European Central Bank. Pressure is also mounting for the central bank to lower interest rates.
"The news leaking out of Europe is giving investors hope that the politicians and central bankers in Europe might be putting together a plan," said Channing Smith, managing director of Capital Advisors Inc. "The devil's in the details."
The Dow Jones industrial average shot up 272.38 points, or 2.5 percent, to close at 11,043.86. It was the biggest gain since Sept. 7. JPMorgan Chase & Co. jumped 7 percent to $31.65, the most of the 30 stocks in the Dow.
The Standard & Poor's 500 rose 26.52, or 2.3 percent, to 1,162.95. The Nasdaq composite rose 33.46, or 1.4 percent, to 2,516.69.
About three stocks rose for every one that fell on the New York Stock Exchange. All 10 industry groups in the S&P 500 rose.
Financial stocks had the biggest gains in the S&P 500, rising 4.4 percent. Banks have the most to lose if Europe's debt crisis gets worse, so investors picked up those stocks as hopes built that a resolution could be on the way.
Huntington Bancshares Inc. rose 8.3 percent, SunTrust banks Inc. rose 8 percent.
Berkshire Hathaway's Class B shares rose 8.6 percent after the company announced a plan to repurchase stock for the first since Warren Buffett took control in 1965.
Investors have been on edge about Europe's debt problems for months. The Dow plunged 6.4 percent last week, its biggest drop since the week ended Oct. 10, 2008 at the height of the financial crisis.
The market's volatility has made many investors nervous. Since the first week of August, the Dow has closed up or down more than 200 points a total of 16 times. There were only four swings of 200 points or more in the other seven months of 2011.
President Barack Obama said in a town hall meeting 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."
Greece is at risk of defaulting on its debt next month if it does not receive the next installment of a bailout package. If that happens, banks that hold Greek bonds would lose money. Analysts also worry that the economies in Europe and the U.S. could slip into another recession.
News that sales of new homes in the U.S. fell to a six-month low briefly sent indexes lower in morning trading, but by midday Eastern the Dow and S&P were higher.
Boeing Co. rose 4.2 percent after the company delivered its first 787 aircraft to Japan's All Nippon Airways. An analyst said the company's earnings should rise for the next few years if the aircraft maker is able to maintain steady production.
Clorox Co. fell 4.3 percent after Carl Icahn withdrew his proposal for a new slate of directors. That suggested the activist investor was unable to find a buyer for the consumer products company.
Eastman Kodak Co. plunged 26.9 percent after the company borrowed $160 million because most of its cash is deposited overseas. Some analysts took that as a sign that the company is running out of cash as it tries to reinvent itself in the era of digital photography.
Trading volume was a bit heavier than average at 4.5 billion shares.