Stocks close higher as Europe nears budget pact
Saturday, December 10, 2011
A deal to forge stronger ties between most of Europe’s economies sent stocks sharply higher Friday as hopes grew that the region is close to resolving its debt crisis. The Dow Jones industrial average rose 186 points.
The Dow and S&P 500 both had their second straight week of gains. Financial stocks rose the most over the week as worries eased about Europe. The yield on the 10-year Treasury note rose back above 2 percent as investors shed low-risk investments.
The agreement between 26 of the 27 nations that use the euro came after marathon overnight talks among European leaders at a two-day summit in Brussels. A deal on tighter fiscal control is considered a crucial step before the European Central Bank will consider committing more money to lower borrowing costs of heavily indebted countries like Italy and Spain by buying their bonds.
Ryan Detrick, senior technical strategist with Schaffer’s Investment Research, cautioned that investors have been disappointed by Europe’s previous efforts to contain its debt crisis. The market will likely remain volatile in the coming weeks, Detrick said, because the Europe plan is “only a minor step” toward a solution.
“We’ve seen these agreements before, and they can just as easily deteriorate,” Detrick said.
The Dow closed up 186.56 points, or 1.6 percent, at 12,184.26. It’s up 1.4 percent for the week.