Stocks soared on Thursday, pushing the Dow well above the 12000 mark, as traders cheered a deal between European policymakers aimed at debt crisis. Hit the jump to read the rest of the story.
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Today’s Markets
As of 11:00 a.m. ET, the Dow Jones Industrial Average soared 240 points, or 2%, to 12,109, the S&P 500 jumped 27.4 points, or 2.2%, to 1,270 and the Nasdaq Composite leaped 54.1 points, or 2%, to 2,705.
The blue-chip average hasn’t crossed above the 12,000-mark since early-August, and is within 800 points of reaching its highest close in 2011. Indeed, the Dow is nearly 1,400 points off of its 2011 lows. Meanwhile, volatility plunged 12%, and yields on government debt rose, indicating traders are rushing back into equity markets.
Financials were the best performers on the day, followed by energy and basic materials shares. Defensive stocks, like healthcare and consumer staples, however, lagged far behind the broader markets.
Wall Street has been driven higher and lower by headlines from across the Atlantic in recent months as market participants have fretted over the specter that the euro zone debt crisis could spark another credit crunch and seize already fragile global economies.
Policymakers meeting at a summit in Brussels forged a deal early Thursday morning that analysts say represents a major step forward for the 17-member currency bloc. Private holders of Greece’s government debt agreed to a voluntary writedown of 50%, potentially staving off a default, and a pushing the embattled country’s level of debt as compared to economic output down to 120% by 2020 from 160% presently. There were worries by market participants that a default by Greece would weigh heavily European banks, which had seen their shares decline heavily.
The leaders meeting at the summit also agreed to leverage the $610 billion European Financial Stability Facility “four of five fold,” which is expected to boost its firepower upward of $1.4 trillion, depending on how it is deployed. Additionally, European banks will have to boost tier-1 capital levels to 9% by June 2012 to provide a bigger buffer against sovereign exposure.
Still, doubts remained Europe’s ability to quickly finalize the agreement that was reached Thursday morning.
