Stocks rise on help for European banks
NEW YORK (AP) — Stocks rose in midday trading Thursday after the European Central Bank moved to support that region's lenders and U.S. retailers reported stronger sales for September. The Dow Jones industrial average was up 113 points.
Target, Nordstrom, Macy's and other retailers reported September sales results that beat Wall Street's expectations. While some of the sales were driven by deep discounts, analysts said the higher sales suggested the U.S. economy was not falling into another recession.
"The market has been pricing in an out-and-out recession, but the fact that consumer spending is holding up shows that we're more likely to continue muddling through at a 1 to 2 percent growth rate," said Brain Gendreau, market strategist at Cetera Financial Group.
Investors also remained focused on Europe's debt problems. The European Central Bank offered new emergency loans to European banks. It also announced that it would buy bonds issued by banks, making it easier for them to lend.
Traders have been worried that European banks could face big losses if Greece defaults on its debt. That would likely cause the value of Greek debt held by those banks to fall sharply in value. If that causes a big enough shock to those banks they could stop lending to each other, causing another freeze in global credit markets, as happened following the collapse of Lehman Brothers in 2008.
The Dow Jones industrial average jumped 113 points, or 1 percent, to 11,05 as of 12:15 p.m. Eastern. The S&P 500 rose 14, or 1.3 percent, to 1,158. The Nasdaq composite added 34, or 1.4 percent, to 2,494.
Bank stocks in Europe and the U.S. rallied. Bank of America Corp. jumped 5.8 percent. Morgan Stanley soared 6.3 percent.
The European Central Bank disappointed some investors, however, by announcing that it would keep interest rates unchanged. Analysts were hoping the bank would cut rates to encourage lending and give a boost to Europe's sagging economy.
In the U.S., the Labor Department said the number of new applications for unemployment benefits rose slightly last month to 401,000. While that is a signal that the job market continues to be weak, the increase was slightly less than what Wall Street economists had predicted, a signs that layoffs are easing. Unemployment benefits typically need to fall below 375,000 to signal job growth.
The hopeful signs on the U.S. economy led investors to pull money out of lower-risk assets. That pushed yields higher on U.S. government debt as investors sold Treasurys. The yield on the 10-year Treasury note rose to 1.96 percent from 1.90 percent late Wednesday.
Corning Inc. rose 3.1 percent after it said it would increase its dividend and buy back shares. Apple Inc. rose 1 percent. The company said company co-founder and former CEO Steve Jobs died Wednesday. Several analysts and large investors said they believe the company would continue to grow under new CEO Tim Cook.