Merkel comment stokes broad rally
Signs of progress in negotiations over Greece’s debts helped launch a stock market rally Wednesday, snapping a weeklong slump.
The rally was broad: All 30 stocks in the Dow Jones industrial average and all 10 industry groups in the S&P 500 index made gains.
“Everybody’s screen is full of green,” said Matt Kaufler, a fund manager at Federated Investors.
Major indexes started higher at the opening of trading, putting the market on track for solid gains. Around midday, Bloomberg reported that German Chancellor Angela Merkel may be willing to release more money from Greece’s bailout fund if the Greek government commits to at least one move to tighten its budget. Without a deal by the end of the month, Greece faces the prospect of going bankrupt and dropping the euro.
The stock market surged after the news broke and held most of its gains until the closing bell.
The Standard & Poor’s 500 index climbed 25.05 points, or 1.2%, to close at 2,105.20. It was the best day for the broad-market benchmark in a month.
The Dow Jones industrial average rallied 236.36 points, or 1.3%, to 18,000.40, while the Nasdaq composite gained 62.82 points, or 1.3%, to 5,076.69.
U.S. government bond prices continued to slide. The drop nudged the yield on the 10-year Treasury note to another high for the year, 2.49%. In late trading the yield was 2.48%. Long-term interest rates have surged in recent months as the economy shows signs of shaking off its winter slump.
“The market is starting to price in an improving economy,” said Brad McMillan, the chief investment officer at Commonwealth Financial. “And we’re seeing a lot of great economic numbers.”
McMillan pointed to last Friday’s report from the Labor Department that showed employers added 280,000 workers to their payrolls last month. Wages, which had barely moved in previous months, also edged up. “There was just a lot to like in that report,” he said.
Major markets in Europe finished with solid gains Wednesday. Germany’s DAX jumped 2.4%, while France’s CAC-40 closed with a gain of 1.7%. The FTSE 100 index of leading British shares added 1.1%.
The yen jumped against the dollar after the head of the Bank of Japan said the country’s currency was unlikely to continue its slump. The dollar fell 1.4%, to 122.64 yen .
Japan’s benchmark Nikkei 225 slipped 0.2%, and South Korea’s Kospi shed 0.6%. Hong Kong’s Hang Seng lost 1.1%, and Australia’s S&P/ASX 200 closed 0.1% lower.