September 12, 2011 / 8:26 AM / in 6 years

Wall St recovers late from euro zone battering

NEW YORK (Reuters) - Stocks rose on Monday, bouncing back in late trading, as hopes that Italy could get financial support from China tempered investors’ worst fears over the euro zone’s sovereign debt crisis.

Traders started the day braced for a possible downgrade of France’s top banks by Moody’s Investors Service, but sentiment improved as various European officials succeeded in tamping down fears that political and financial leaders were losing control of the situation.

Italy has asked China to make “significant” purchases of Italian debt, the Financial Times reported on its website on Monday.

“It shows the Chinese are serious about addressing the stresses in the marketplace,” said Robbert Van Batenburg, head of equity research at Louis Capital in New York.

Wall Street’s comeback suggested some easing of worry that the global economy was lurching toward another recession.

Nasdaq led gains, with merger news helping to support tech shares. NetLogic Microsystems Inc NETL.O ended up 50.8 percent at $48.12 percent after wireless chipmaker Broadcom Corp BRCM.O agreed to buy the company for about $3.7 billion. An index of semiconductors .SOX jumped 3 percent while Broadcom shares dipped 1.1 percent to $33.06.

Besides technology, financials were among the best performers on the S&P 500. The S&P financial index .GSPF gained 1.2 percent.

Fears Europe’s credit crisis would drag on U.S. banks have been pressuring financial stocks for months, sending shares of some to at least two-year lows.

The Dow Jones industrial average .DJI finished up 68.99 points, or 0.63 percent, at 11,061.12. The Standard & Poor’s 500 Index .SPX was up 8.04 points, or 0.70 percent, at 1,162.27. The Nasdaq Composite Index .IXIC ended 27.10 points higher, or 1.10 percent, at 2,495.09.

The Broadcom merger “is a sign that many stocks are undervalued from a historical perspective,” said Joseph Cangemi, managing director at BNY ConvergEx Group in New York.

The day’s gains broke a two-day losing streak, but the S&P 500 is still down 13.6 percent since July 22, roughly when the recent market downtrend began. Much of the recent selling has been tied to worries over the euro zone debt crisis.

In another sign leaders have stepped up action, euro zone officials said U.S. Treasury Secretary Timothy Geithner will attend a meeting of euro zone finance ministers on Friday to show unity in the face of market turmoil and risks to growth.

The late rebound came after European shares .FTEU3 finished at two-year lows. Investors feared the euro zone’s rescue plan for the sovereign debt crisis was in danger.

On Monday Italy was forced to pay sharply higher interest to attract buyers for its debt.

Mounting fears of a Greek debt default also caused investors to dump stocks. Because of the possible debt default by Greece, sources said they expected Moody’s to downgrade French banks, which were seen as vulnerable.

A backdrop to the market’s early losses was a weekend meeting of the Group of Seven industrialized nations, which failed to come up with fresh proposals for boosting global growth.

Barclays Capital, citing “higher levels of economic uncertainty,” cut its full-year target for the S&P 500 stock index by about 9 percent to 1,325.

Volume was 8.3 billion shares on the NYSE, Amex and Nasdaq, above last year’s average of roughly 7.6 billion.

Decliners still beat advancers on the NYSE by about 15 to 14, while advancers outpaced decliners on Nasdaq by about 7 to 6.

Reporting by Caroline Valetkevitch, additional reporting by Ryan Vlastelica; Editing by Kenneth Barry

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below