Stocks rise after Berlusconi promises to step down
NEW YORK -- Stocks turned higher Tuesday once investors got the news they had been hoping for: Italian Prime Minister Silvio Berlusconi promised to resign once a new budget was passed. The Dow Jones industrial average closed up 101 points.
Italy became a key focus for investors this week after doubts emerged that the country would go through with a tough package of austerity measures. Many investors saw Berlusconi as an obstacle to sweeping economic reforms needed to help Italy avoid sinking into a debt crisis.
The yield on the 10-year Italian government bond spiked close to 7 percent Tuesday, a sign that markets are questioning the country's ability to pay its debt. Unlike Greece, Portugal or Ireland -- all of which received financial lifelines -- Italy has too much debt to be rescued by its European neighbors.
Europe's evolving debt crisis has been a major driver of trading in financial markets since the beginning of October. The S&P 500 is up 14.9 percent since hitting a 2011 low on Oct. 3 after European leaders began to move more forcefully to get the situation under control. Markets have been quick to respond to worrisome signals that Greece might be edging closer to a default, which would cause huge losses for European banks.
"Europe is the last big question hanging over the market," said Rick Fier, vice president of equity trading at Confier Securities. "The market has been so whipsawed lately that it's really just staying in place until we know some more outcomes."
The Dow Jones industrial average rose 101.79 points, or 0.8 percent, to close at 12,170.18. Manufacturer 3M Co. gained 2.7 percent, the most of the 30 stocks in the average.
The S&P 500 rose 14.80, or 1.2 percent, to 1,275.92. Financial companies posted the strongest gains. Regions Financial Corp. jumped 5.3 percent. Wells Fargo & Co. climbed 4.4 percent.
The Nasdaq composite rose 32.24, or 1.2 percent, to 2,727.49.
U.S. stock indexes fell in the morning after Berlusconi narrowly survived a confidence vote, a sign that he might continue to cling to power. The market turned higher immediately after headlines crossed around 2 p.m. Eastern saying Berlusconi had promised to step down after economic reforms are passed. That is expected to happen next week.
European stock markets were also higher. Italy's main index rose 0.7 percent. Germany's main index rose 0.6 percent, France's 1.3 percent.
In the U.S., the Labor Department said employers advertised more jobs in September than at any other point in the past three years. The 7 percent increase in job openings is a hopeful sign that companies may step up hiring.
Priceline.com Inc. rose 8.6 percent after its third-quarter earnings more than doubled from a year earlier. Most of the gain was attributed to a jump in hotel bookings.
Activision Blizzard Inc. gained 1.4 percent as analysts expect the company's latest "Call of Duty" video game to sell about 10 percent more units than last year's version. Auction house Sotheby's fell 2.2 percent after the company posted a wider-than-expected loss in the third quarter.
Nearly three stocks rose for every one that fell on the New York Stock Exchange. Trading volume was above average at 3.9 billion shares.