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Wall Street up on European hopes, bank rally

business Updated: Oct 19, 2011 07:31 IST

IANS
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The US stocks ended sharply higher on Tuesday amid strong performance in financial sector and news that European policymakers were planning a two-trillion-euro fund, Xinhua reported.

The Standard & Poor's 500 surged 24.52 points, or 2.04%, to end at 1,225.38, the highest close since early August.

The Dow Jones industrial average gained 180.05 points, or 1.58%, to 11,577.05, while the Nasdaq Composite Index rose 42.51 points, or 1.63%, to 2,657.43.

The rally was fueled by a report saying Germany and France had reached an agreement to increase the firepower of Europe's recently overhauled bailout fund.

According to the Guardian, the size of the European Financial Stability Facility (EFSF) will remain at 440 billion euros, but the "effective lending capacity" of the fund will be two trillion euros.

Financial shares continued to catch eyes, with big banks among the best performers in the market even though some of them posting lackluster results.

Bank of America surged more than 10% after reporting a third-quarter profit of $5.9 billion Tuesday due to accounting gains and assets sales.

Other banks were also higher, with JP Morgan Chase up nearly 6% and Citigroup jumping almost 7%, pushing the financial sector up about 5%.

Goldman Sachs, surprisingly, ended more than 5% higher even after the bank reported a loss of $428 million in the third quarter.

IBM was the biggest laggard in the Dow, tumbling over 4% after the tech giant's revenue barely met forecasts, underscoring fears over slower IT spending.

After the market closed, three more big tech names reported earnings.

Intel spiked more than 4% in after-hour trading after the world's biggest chip maker announced earnings that beat Wall Street estimates.

Yahoo also got a boost, jumping nearly 3% after report showed it managed to meet all its quarterly earnings targets while Apple slumped more than 7% after its financial results came in below expectations, a rare miss for the company.

In other markets, the US dollar fell against most major currencies in late New York trading while crude oil traded higher.

Light, sweet crude for November delivery added $1.96, or 2.27% to settle at $88.34 a barrel on the New York Mercantile Exchange. In London, Brent crude for December delivery climbed 99 cents, or 0.9% to close at $111.15 a barrel.