European markets gain after Greece finds new leadership and Italy's Senate approves austerity measures. US consumer sentiment rises more than expected. Gold and oil rise.
By TheStreet Staff on Fri, Nov 11, 2011 8:24 AM
By Chao Deng, TheStreet
Article from MSN Money
Updated at 1:25 p.m. ET
Stocks were pushing towards their high-water marks for the year Friday as the U.S. consumer outlook improved and Italy and Greece appeared to be back on track with fiscal austerity plans.
The Dow Jones Industrial Average ($INDU +2.19%) was advancing 269.1 points, or 2.2%, at 12,162. The blue-chip index was on track to turn in a fourth day of gains for the week. With the gains made so far on Friday, stocks have recovered from the week’s losses, including from Wednesday's global selloff in which the Dow logged its largest decline in seven weeks.
The S&P 500 ($INX +1.95%) was rising 24.7 points, or 1.9%, at 1,264 and the Nasdaq ($COMPX +2.04%) was gaining 53.6 points, or 2%, at 2,678.
Stocks extended gains at the open after the University of Michigan reported that consumer sentiment in November rose to its highest level in five months. The reading on sentiment rose to 64.2 from a revised 60.9 in October, surpassing expectations of an increase to 62 from October's originally reported reading of 57.5.
All 30 components on the Dow were rising with Walt Disney (DIS +5.95%) leading the way. The entertainment giant reported fiscal fourth-quarter earnings and revenue that beat analysts’ estimates, thanks to strong sales at its media networks and resorts. Excluding charges related to restructuring and impairment, Disney earned 59 cents, beating the 54-cent forecast of analysts surveyed by Thomson Reuters. Revenue rose 7% to $10.43 billion, topping expectations for $10.36 billion. Shares were up 6.9% to $37.03.
Also leading the Dow were Bank of America (BAC +2.99%), Boeing (BA +3.22%) and United Technologies (UTX +3.05%).
”Investors in general are not prepared for good news which is why you see these violent moves to the upside,” said Brian Belski, chief investment strategist with Oppenheimer Asset Management. “We have to reply on perspective in fundamentals… we think economic surprises will continue to be on the upside.”
The Italian Senate’s approval of the country’s 2012 budget law Friday opens up a parliamentary vote on the bill this weekend. If passed, Prime Minister Silvio Berlusconi would resign, allowing a new emergency government, potentially led by Mario Monti, to get the country back on track with fiscal austerity.
However, headlines from Europe could make for a choppy trading day. On the positive side, Greece has determined its next prime minister, paving the way for fiscal reform; Italian bond yields have eased; and France's credit rating remains pristine after a false downgrade scare. On the downside, discussions among European leaders about whether countries should be able to exit the European Union puts a damper on the optimism. Greece and Italy still face deep challenges ahead.
"The last few days' worth of economic data was mixed, on balance leaving us with a slightly better outlook for second-half [U.S. economic growth] than at the end of last week," wrote Macroeconomic Advisors in a research note. "Developments in Europe, especially the burgeoning crisis in Italian government debt, have raised downsides for the European economy and an even more intense financial crisis with greater negative spillovers to the global economy."
In Europe, London's FTSE was rose 1.8% and Germany's DAX closed 3.2% higher. Overnight, Asian stocks followed U.S. stocks higher. Japan's Nikkei Average finished down 2.91%, and Hong Kong's Hang Seng plummeted 5.25%.
In corporate news, E-Trade Financial (ETFC -4.11%) said it has decided not to sell itself after a three-month strategic review. Rejecting pressure from shareholder Citadel to sell itself to another online broker such as TD Ameritrade (AMTD +1.84%) or Charles Schwab (SCHW +2.15%), E-Trade CEO Steven Freiberg said, "the management team will continue to execute on our strategy designed to create value for both our stockholders and our customers." Shares were tumbling 4.1% to $9.09.
Citigroup (C +2.44%) was up 2.9% at $29.48. According to the Wall Street Journal, the bank will sell EMI Music Publishing to a buyer under Sony for $2.2 billion and EMI Music, the recording division, to Universal for $1.9 billion.
Caterpillar (CAT +4.26%) was rising 3.8% after the company said it will buy ERA Mining Machinery to get greater exposure to the modernization of China’s coal mines. The mining equipment manufacturer offered $887 million for ERA, which is China’s third-largest maker of roof supports based on sales.
Gold for December delivery was gaining $25.60 to trade at $1,785.20 an ounce. In other commodities, the December crude oil contract edged up $1 to trade at $98.78 a barrel.
The euro was rebounding by 1.3% to $1.37 after dropping about 2% Thursday. The dollar was weakening against a basket of currencies, with the dollar index down 1.080. The bond market is closed for Veterans Day.