S&P 500 Rides Up 2%; World Awaits Euro Austerity Implementation

Bikram Pandey
11 Nov, 2011
New York City

U.S. stocks closed higher and wiped out the losses of the week when volatility drove the sentiment. S&P 500 index closed up 0.9% for the week after European leaders offered decisive steps to implement austerity measures.

[R]4:10 PM New York – U.S. stocks closed higher and wiped out the losses of the week when volatility drove the sentiment. S&P 500 index closed up 0.9% for the week after European leaders offered decisive steps to implement austerity measures.[/R]

U.S. Stocks soared more than 2% following the improved political climate in Europe. The rising optimism in stocks and commodities markets lifted banks, resources driven sectors and export sensitive stocks.

Markets on both sides of the Atlantic closed sharply higher after the appointment of new and technocratic government in Greece and the passage of austerity measures in Italy.

Stocks in New York and in Europe soared on the hopes that the new governments will implement quick measures to reign ballooning government spending and deficits and also lower the government need to borrow.

The long hoped fiscal fitness discipline will finally imposed after external pressures from European authorities, international lending agencies and the regional central bank.

Investors bid up commodities as well. Copper and gold soared more than 2% and bond yields in Europe fell.

In the U.S. earnings news, Brookfield third quarter net surged to $716 million. Dillard''s third quarter net increased 1.9% to $26.6 million. Nordstrom third quarter net increased 7.2% to $127 million. Walt Disney fourth quarter net surged 30% to $1.09 billion.

European markets advanced after Italy’s Senate approved austerity measures. Italy is expected to have a technocrat led government as early as Sunday. The Italian bond yield declined to 6.45% but bond market sentiment remained cautious.

In the deal making news, Citigroup sold record label business of U.K. based EMI to Vivendi’s Universal Music for $1.9 billion and music publishing business for $2 billion to consortium controlled by Sony.

Stocks in Japan rebounded in a cautious trading. For the week the benchmark index declined 3.3%. Daio Paper declined after it said it will miss earnings deadline and may face delisting. Olympus dropped 5% and will delay its earnings. NOK Corp, the rubber products maker lowered its full year outlook.

Australian stocks edged up and closed nearly unchanged after a volatile week. Leighton Holdings vowed to keep costs under control and reaffirmed its annual earnings outlook. Fairfax Media dropped after founder sold his entire stake.

Commodities, Bonds and Currencies

U.S. bond markets were closed, on Thursday the yield on 10-year U.S. bond closed up to 2.04% and 30-year bond increased to 3.09%.

The U.S. dollar fell 1% at $1.374 to one euro and closed lower against the Japanese yen to 77.12.

Immediate delivery futures of Texas crude oil increased $1.22 to $99.00 a barrel and futures of natural gas decreased 7 cents to $3.57 per mbtu and gasoline prices decreased 2.78 cents to 260.90 cents a gallon.

In metals trading, copper increased 9.30 cents to $3.46 per pound, gold soared $29.20 to $1,788.00 per ounce and silver increased $0.66 to $34.81.