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The Two-Way
10:45 am
Mon November 28, 2011

Markets Rally On European Debt News, Black Friday Sales

At point today, the Dow Jones Industrial Average jumped 2.9 percent to 11,554. The rally comes after news that European leaders had made progress on a solution to the sovereign debt crisis and record sales this past Friday.

It also comes after a 4.8 percent downturn last week, the worst Thanksgiving week since the markets started observing the holiday in 1942.

The Wall Street Journal explains some of the market's confidence today:

European markets were in a broad rally. The Stoxx Europe 600 soared 3.6%, after news that euro-zone leaders were negotiating a new pact to contain the sovereign-debt crisis. A new agreement, including measures to curb excessive debt by making budget discipline legally binding, could persuade the European Central Bank to take more action to halt the selloff in debt markets.

Investor sentiment was also boosted after a report indicated the International Monetary Fund could provide between €400 billion ($529.6 billion) and €600 billion in financial assistance to Italy, though the IMF denied that it is in bailout talks with the heavily indebted country.

"Today appears to be a day dominated by hope," said Lawrence Creatura, portfolio manager at Federated Investors. "Alternating waves of hope and despair from Europe have added volatility to the markets. [Today's] rally really is broad based. It will be important for the sustainability of any moves today to have the European news flow's support. We have to see follow-through with actions, rather than words and rumors."

One analyst Bloomberg spoke to said he was hoping the European crisis could move to become a "neutral" influence on the markets. "There's an underpinning of growth in the U.S. and it's picking up steam," Dan Veru, chief investment officer at Fort Lee, New Jersey-based Palisade Capital Management LLC, told Bloomberg.

Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.