April 25, 2024

Stocks & Bonds: daily-stock-market-activity

Stocks rose on Monday, although they lost some of their gains after a media report said Standard Poor’s was about to warn Germany and other euro zone nations that their credit ratings were being assessed for a possible downgrade.

The markets were generally higher earlier in the day when an agreement between leaders of France and Germany raised optimism that European leaders would reach a credible solution to their debt crisis.

S. P. confirmed after the closing bell that it might downgrade the credit ratings of 15 euro zone countries. S. P. placed the ratings of euro zone countries, including top-rated Germany and France, on credit watch negative. The euro last traded at $1.339, down 0.1 percent for the day, near a session low of $1.337.

“We know Europe is facing a dire situation here and this action seems appropriate,” said Brian Dolan, chief strategist at Forex.com in Bedminster, N.J. “If they are trying to send a message, now is a good time.”

The rating agency’s move came as the leaders of France and Germany agreed to a master plan for imposing budget discipline across the region ahead of a meeting on Friday.

The proposal from President Nicolas Sarkozy of France and Chancellor Angela Merkel of Germany included automatic penalties for governments that fail to keep their deficits under control.

Wall Street ended off the day’s highs, though it was still near 1 percent higher.

The Dow Jones industrial average gained 78.41 points, or 0.65 percent, to 12,097.83. The Standard Poor’s 500-stock index rose 12.80 points, or 1.03 percent, to 1,257.08. The Nasdaq climbed 28.83 points, or 1.10 percent, to 2,655.76.

European stocks hit a five-week closing high, though analysts were wary the optimism could prove overdone.

“We are far from an easy consensus that it’s a done deal,” said Marc Pado, United States market strategist at Cantor Fitzgerald in San Francisco. “But we are further along in the negotiations than we’ve been and we are focused on the right things now.”

While the American economy is still expected to avoid another recession, data released Monday was also downbeat.

Growth in the service sector in the United States eased last month, and new orders for factory goods fell in October, tempering recent optimism that the economy might be poised for a more vigorous rebound.

The Institute for Supply Management said Monday that its services index fell unexpectedly to 52.0 last month from 52.9 the month before, dragged lower by a decline in employment. Although that figure was at its weakest since January 2010, business activity and new orders both improved, showing the mixed nature of expansion that also was evident in the upbeat jobs report for November.

A reading above 50 indicates expansion.

“This is the first disappointing indicator we’ve seen in the last couple of weeks,” said Cary Leahey, managing director at Decision Economics in New York. “The economy has improved, it is still not growing very quickly.”

Pointing to growth in services, the I.S.M.’s gauge of new orders rose to 53.0 from 52.4.

In a separate report on Monday from the Commerce Department, new orders for factory goods fell in October for the second consecutive month, suggesting a possible softening in manufacturing. That area of the economy has been a crucial support for the recovery. The agency said that orders for manufactured goods decreased 0.4 percent.

Economists had forecast orders would fall 0.3 percent after a previously reported 0.3 percent increase in September.

Article source: http://feeds.nytimes.com/click.phdo?i=e34698b77c217c55154ada0bc650968c

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