Stocks Rise as Earnings Optimism and European Plans Boost Investor Confidence

Strategic Insights -

U.S. stocks staged a powerful rebound as investors grew more hopeful about corporate earnings and European leaders' efforts to support the region's banks. The optimism sent the Standard & Poor's 500 Index to its largest weekly gain since July 2009, erasing its 2011 loss and sending the Dow Jones industrial average to a three-week high. Energy, raw-material, and technology shares led the charge, propelling the S&P 500 to its highest level since August 3.

Key Takeaways:

  • The S&P 500 Index rose 6 percent this week to 1,224.58, its highest level since August 3, and has surged 11 percent since October 3.
  • Energy, raw-material, and technology shares led gains, adding at least 7.5 percent and propelling the S&P 500 to its highest level since August 3.
  • The Dow Jones industrial average rose 541.37 points, or 4.9 percent, to 11,644.49 this week, erasing its 2011 loss.
  • Apple Inc. and Google Inc. set records as Apple Inc. closed at a record high and Google Inc. completed a nine-day streak of gains.
  • Investors shifted their attention back toward earnings announcements, with a Boston-based money manager at Pioneer Investments stating that people are "hopeful that, at least for now, disaster can be averted in Europe."
  • German Chancellor Angela Merkel and French President Nicolas Sarkozy announced plans to recapitalize European banks by November 3.

Statistics:

  • The S&P 500 Index rose 11 percent since October 3, when it closed within 1 percent of a bear market, or 20 percent plunge, from its high in April.
  • The Dow Jones industrial average rose 541.37 points, or 4.9 percent, to 11,644.49 this week.
  • U.S. stocks rallied the most since August on October 10 after Merkel and Sarkozy announced their plans.
  • The S&P 500 rebounded after dipping below 1,100 in early October for the first time in more than a year and posted its biggest quarterly loss since the end of 2008.
  • The S&P 500 extended its weekly advance Friday, rising 1.7 percent, after a report on U.S. retail sales beat estimates.

Sources:

  • Bloomberg News
  • Pioneer Investments