Europe lifts Wall Street for 3rd day, payrolls awaited

Europe lifts Wall Street for 3rd day, payrolls awaited

New York: US stocks rose for a third day in a row on Thursday as developing euro zone plans to backstop European banks gave investors hope the threat of a financial crisis was waning.

Bank shares led gains on Wall Street as the EU planned to recapitalize banks. The European Central Bank said it was ready to buy bonds to provide longer-term cheap money for European lenders in need of funding.

The S&P Financial Sector gained 3.2% and has risen 8.8% in the past three days, though it remains one of the weakest sectors this year.

Europe’s woes were the primary cause behind the selling that briefly dropped the S&P 500 into bear-market territory on Tuesday. Since hitting a 13-month low near 1,075 that day, the S&P 500 has gained 8.4%.

“We’re popping back up again, based on the idea they (European officials) will reach an agreement and rescue us," said Doug Roberts, chief investment strategist at Channel Capital Research.

He said the market has been swinging between euphoria and despair on headlines from Europe. That has translated to increased volatility and an overall directionless market.

Highlighting the recent volatility, Thursday marked the fifth consecutive day of moves above 1.7% in the S&P 500. In those five days, it has gained just 0.39%.

Market attention will next turn to Friday’s US payrolls report for September. Investors hope the data suggests the US economy is not falling into recession but growing slowly.

The Dow Jones industrial average gained 183.38 points, or 1.68%, to 11,123.33. The S&P 500 gained 20.94 points, or 1.83%, to 1,164.97. The Nasdaq Composite gained 46.31 points, or 1.88%, to 2,506.82.

The ECB’s bond-buying is intended to boost confidence in stocks and other risky assets. A move in the same direction from the US central bank last year triggered rallies.

Shares of Morgan Stanley, which have been hurt recently by fears of its exposure to European banks, rose more than 21% in three days to close Thursday at $15.18.

From a technical perspective, the S&P 500 remains in a downtrend. The index has been trapped in a range in the past months, which has been deteriorating with lower lows.

“For the time being, we do remain in a fairly well-defined downtrend," said Richard Ross, global technical strategist at Auerbach Grayson in New York.

He said the fact that the benchmark has not traded above its 50-day moving average since late July is a sign that the market can still go lower.

“If you did get a break back above 1,180, that would be a stronger signal that the bottoming process has begun," he said.

A rally in copper prices off 14-month lows helped lift shares in the materials sector. Dow component Alcoa rose 5.4% to $9.88.

Apple shares gave up earlier gains and slipped 0.2% to $377.37 a day after co-founder Steve Jobs, the driving force behind the creation of the iPod, iPhone and iPad, died of pancreatic cancer at the age of 56.

New claims for unemployment benefits rose slightly less than expected last week, hinting at an improved labor market a day before the closely watched non-farm payrolls report.

About 9.14 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above the year’s daily average so far of 8.02 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of more than 11 to 2, while on the Nasdaq, more than three stocks rose for every one that fell.