US stocks surge as worries ebb over health of European banks
NEW YORK: US stocks rallied, with the Dow Jones Industrial Average rising more than 160 points, as worries over the health of European banks diminished after a report said Deutsche Bank AG is nearing a less-costly settlement with regulators than investors feared.
Relief swept over equities as Agence France-Presse reported the German lender is near a US$5.4-billion (186.7 billion baht) deal with the Justice Department, less than half an initial request, to settle a probe related to bad mortgages. Financial shares in the S&P 500 Index jumped the most in eight weeks, after falling yesterday to the lowest since Aug 2. Costco Wholesale Corp increased the most in more than two months to boost consumer-staples companies after its earnings beat estimates.
The S&P 500 rose 0.8% to 2,168.27 at 4pm in New York, posting a fourth consecutive quarterly gain and the strongest this year. The index closed near its average price during the past 50 days. The Dow rose 164.70 points, or 0.9%, to 18,308.15 today. The Nasdaq Composite Index added 0.8%. About 7.6 billion shares traded hands on US exchanges, 15% higher than the threemonth average.
“There’s a little bit of recognition of the reality that Deutsche Bank is not Lehman,” John Stoltzfus, chief market strategist at Oppenheimer & Co in New York, said by phone. “The banks, as a result of all the regulatory changes since the world crisis, are in better shape to withstand this. The other side is that we’re coming to the quarter end, and people are beginning to realize that September was not as bad as many thought it was.”