New York: US stocks drifted in quiet trading on Tuesday, a day after major indexes posted their biggest gains in more than a year on relief over the European Union’s bailout program for its weaker members.
Major indexes edged higher but kept in a tight range after excitement faded about the nearly $1 trillion rescue program to support debt-burdened countries such as Greece.
The bailout helped reassure investors that European countries would act decisively to protect the euro. However, several weaker countries will still have to make deep spending cuts in order to rebuild confidence in the euro, which could slow down a recovery in Europe’s economy. A day after posting huge gains on the bailout package, major stock indexes edged down in Europe.
“The market has reflected on the details and they see that it’s not all going to be roses,” said Mike Shea, managing partner at Direct Access Partners LLC in New York.
Asian markets retreated after a report showed inflation in China accelerated last month. China has already spooked markets by clamping down on bank lending to cool its economy, and investors worried that the inflation report could lead Chinese authorities to tap the brakes on its huge economy again. That could impact US and other companies that do business with China.
Global economic indicators, such as the US government’s monthly jobs report, had been overshadowed recently as investors feared debt problems in Greece would spread through Europe. Traders were also concerned about how much European debt woes would hurt the euro, the currency used by 16 European countries.
In midday trading, the Dow Jones industrial average rose 20.18, or 0.2%, to 10,805.32. The Standard & Poor’s 500 index rose 1.96, or 0.2%, to 1,161.69, while the Nasdaq composite index rose 10.60, or 0.5%, to 2,385.27.
The Dow jumped 405 points, or 3.9%, on Monday. The S&P 500 surged 4.4%, while the Nasdaq composite index jumped 4.8%. It was the market’s biggest jump since March 2009 and followed a tumble late last week.
Treasury prices were mixed after plunging on Monday as investors dumped safe investments following news of the European bailout. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.56% from 3.54% late Monday.
The dollar rose and hovered near its strongest levels in 14 months against the euro.
Four stocks fell for every three that rose on the New York Stock Exchange, where volume came to 520.1 million shares, compared with 784 million traded at the same point Monday.
The Russell 2000 index of smaller companies rose 4.28, or 0.6%, to 693.89.