By Rita Nazareth - Nov 11, 2011 11:33 PM GMT+0700
Nov. 11 (Bloomberg) -- Italy’s Senate approved debt-reduction measures today in an attempt to shore up investor confidence and pave the way for a new government that may be led by former European Union Competition Commissioner Mario Monti. The Chamber of Deputies is expected to vote on the package tomorrow. David Tweed reports on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
U.S. stocks rallied, preventing a weekly drop in benchmark indexes, as American consumer confidence topped estimates and Italy’s approval of debt- reduction plans eased concern about Europe’s debt crisis.
All 10 groups in the Standard & Poor’s 500 Index rose as 491 stocks climbed. Bank of America Corp. (BAC) and Citigroup Inc. (C) increased at least 3.1 percent as financial shares advanced. Caterpillar Inc. (CAT) and Alcoa Inc. (AA) climbed more than 2.6 percent to pace gains among the biggest companies. Walt Disney Co. (DIS) jumped 7 percent as the biggest theme-park operator reported a 30 percent gain in profit, beating estimates.
The S&P 500 added 2.1 percent to 1,265.31 at 11:31 a.m. in New York. The benchmark gauge has risen 1 percent since Nov. 4, preventing a second weekly drop. The Dow Jones Industrial Average advanced 271.74 points, or 2.3 percent, to 12,165.53.
“Things are starting to settle back in,” Philip Orlando, the New York-based chief equity market strategist at Federated Investors Inc., said in a telephone interview. His firm oversees about $355 billion. “The expectation was that Italy and Greece were going out of business. That was overdone. We’re going to see some necessary austerity measures put in place,” he said. “In the U.S., the economic numbers have absolutely turned the corner and are starting to accelerate.”
Stocks extended gains as the Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 64.2 this month, the highest since June. The median estimate of economists surveyed called for 61.5. Earlier gains were driven by a drop in Italian bonds yields as the Senate approved budget measures in a bid to allow for a new government. In Greece, Lucas Papademos, a former vice president of the European Central Bank, will be sworn in as premier of a unity government.
Not Derailed
The Morgan Stanley Cyclical Index jumped 2.9 percent as investors became more optimistic that the global economic recovery would not be derailed by Europe’s debt crisis. The Dow Jones Transportation Average added 2.8 percent, while the KBW Bank Index gained 2.6 percent. Bank of America added 4.2 percent to $6.28, while Citigroup advanced 3.1 percent to $29.52. Caterpillar increased 3.5 percent to $95.42. Alcoa rose 2.7 percent to $10.53.
Walt Disney climbed 7 percent to $37.08. Higher fees from pay-TV operators, advertising gains and improved results at resorts drove revenue and profit growth. Audience ratings for ESPN increased 13 percent in the quarter, according to Nielsen data provided by Barclays Capital. Disney resorts benefited from higher ticket prices and a new ship.
Single-Serve Brewers
Green Mountain Coffee Roasters Inc. (GMCR) rose 5.8 percent to $43.25. The largest U.S. seller of single-serve brewers plunged 39 percent yesterday, the most ever, after its sales trailed estimates. The stock had lost 63 percent since its peak in September, wiping out $11 billion of market value.
Molycorp Inc. (MCP) slumped 13 percent to $33.69. The owner of the largest rare-earth deposit outside China cut its 2011 production forecast and posted third-quarter profit and revenue that missed analysts’ estimates.
E*Trade Financial Corp. fell 3.3 percent to $9.17. The online brokerage’s board rejected putting the company up for sale following a strategic review spurred by Citadel LLC, the company’s biggest shareholder.
To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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