March 29, 2024

Stocks and Bonds : Shares Rise as Europe Meets on Debt Crisis

Despite some revised earnings outlooks because of the weakness in Europe, analysts were expecting some buoyancy from the financial markets.

The three main indexes in the United States had raced more than 1 percent higher shortly after the opening on Wall Street, but then failed to sustain their gains and gyrated through much of the trading session before closing higher. The uncertain trading came after some of the steepest losses in the market in weeks on Tuesday, when the Dow Jones industrial average snapped a three-day winning streak.

On Wednesday, German lawmakers approved a proposal to more than double an emergency bailout fund, after Chancellor Angela Merkel asked lawmakers to overcome their aversion to risk and put Germany behind efforts to combat the crisis.

But European leaders worked into the night Wednesday as they tried to find a solution to the debt crisis.

“Everyone is clearly in wait-and-see mode for the outcome of today’s summit,” Edel Tully, an analyst with UBS, said in a research note.

The deal being discussed late Wednesday in Brussels included a restructuring of Greek debt, an injection of new capital into European banks and the expansion of the bailout fund.

While Europe’s leaders said they had made some progress last weekend on measures aimed at addressing their financial and economic problems, expectations were not high for any firm or quick resolution.

“Modest expectations,” said Stephen Wood, Russell Investments chief market strategist, ahead of the European Union meeting. “Now if the market could just get an outline of a solution, an outline of the difficult decisions, there could be a positive reaction in the markets.”

The Dow was up 1.39 percent, or 162.42 points, at 11,869.04, and the S. P. rose 1 percent to 1,242. The Nasdaq composite index was up about 0.46 percent at 2,650.67.

The gains in the Dow were helped by a more than 4 percent rise, to $66.56, in shares of Boeing, which said that its third-quarter earnings had topped estimates. It also projected that its new 787 Dreamliner would earn a low, single-digit profit from the sales of the first 1,100 planes.

The United States 10-year Treasury bond yield rose to 2.21 percent, from 2.11 percent on Tuesday. The price fell 26/32 to 99 9/32.

The Euro Stoxx 50 index of euro zone blue chips closed 0.4 percent lower, while stocks in France, Germany and Britain were mixed.

Financial stocks in particular have borne the brunt of uncertainty in Europe, but on Wednesday, financial stocks were up nearly 2 percent.

Corporate results had an impact on major sectors. Companies dependent on consumer spending slipped less than 1 percent, weighed down by a 12.6 percent decline in the share price of Amazon to $198.40. The online retailer reported Tuesday that its operating income for the quarter had fallen 71 percent from 2010.

Energy stocks were up more than 2 percent. Valero Energy rose more than 15 percent on unattributed reports of possible bids for the company. Investors also weighed the potential impact of economic data on domestic growth. Durable goods orders fell in September because of a decline in aircraft orders, but the component used as a gauge for business equipment investment, or nondefense capital goods orders, rose 2.4 percent compared with the previous month, a report by the Commerce Department said on Wednesday.

The rise in business investment suggested that third-quarter gross domestic product growth has accelerated to an annual rate of 3.2 percent, economists with Capital Economics estimated.

Another report dealing with the housing sector showed that new single-family home sales rose by 5.7 percent from August to September, to about 313,000, the highest pace since April. But the median price fell to $204,400 from $210,900 in August.

“U.S. growth is well below potential, and the structural issues in the housing and labor markets may take years to resolve,” said Cliff Waldman, an economist for the Manufacturers Alliance/MAPI.

“Further, the difficult sovereign debt and banking crises in the euro zone could wreak havoc on global growth,” Mr. Waldman said.

Christopher Drew and Steven Erlanger contributed reporting.

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