US stocks: Wall St. closes at 3-month high on hopes of more aid to Europe
NEW YORK - U.S. stocks closed at three-month highs for the second day in a row on Monday, extending last week's rally on the hope for more assistance for the troubled euro zone.
The S&P 500 rose to its highest point since early May, but pared its gains going into the close. The benchmark index also failed to breach 1,400, a level that could spur further buying if convincingly broken. The S&P 500 hasn't closed above the 1,400 level since May 2.
Sentiment in Spanish and Italian bond markets - the forefront of the three-year debt crisis - improved, with two-year Spanish yields falling to 3.42 percent on Monday, less than half of a late July high of over 7 percent.
European Central Bank President Mario Draghi has said the ECB may buy short-dated bonds to lower borrowing costs to help Europe, which has been mired in a debt disaster. European shares closed at four-month highs.
"Nothing has been fixed in Europe, but things seem to be getting better, and it seems unlikely that there will be any kind of real blow-up," said John Manley, chief equity strategist at Wells Fargo Funds Management in New York. "I'm worried I may be too bearish."
Manley said he saw the S&P 500 trading in a range between 1,250 and 1,450, "which will likely persist for a while, with continued huge volatility."
Wall Street rallied on Friday with the S&P 500 marking its fourth straight week of gains on a strong U.S. jobs report and renewed hope that European authorities would act to contain the euro zone's debt crisis through ECB purchases of Italian and Spanish bonds.
Meanwhile, a group of investors will rescue embattled market maker Knight Capital Group Inc in a $400 million deal that keeps the company in business, Knight said on Monday. But it comes at a huge cost to investors. The stock fell 24.2 percent to $3.07.
The Dow Jones industrial average rose 21.34 points, or 0.16 percent, to 13,117.51 at the close. The Standard & Poor's 500 Index gained 3.24 points, or 0.23 percent, to 1,394.23. The Nasdaq Composite Index advanced 22.01 points, or 0.74 percent, to end at 2,989.91.
Material shares were the strongest for the day, with an S&P materials index climbing 1.1 percent on the improved sentiment regarding Europe. U.S. Steel led the sector, surging 5.6 percent to $22.94. Newmont Mining added 3.3 percent to $46.12.
Utilities, considered a defensive play, were the day's weakest, with the S&P utilities index down 0.3 percent.
Best Buy jumped 13.3 percent to $19.99 after Richard Schulze, the founder and former chairman, offered to buy the shares he does not already own in the electronics retailer for $24 to $26 each.
Cognizant Technology Solutions Corp rose 11 percent to $64.21 after the information technology services provider raised its full-year adjusted profit forecast. The stock's gains contributed to the outsized moves in the Nasdaq, which at its session high topped 3,000 for the first time since May 4.
Of the 411 companies in the S&P 500 that have reported second-quarter earnings through Monday morning, 67.4 percent have reported earnings above analysts' expectations, near the four-quarter average of 68 percent, according to Thomson Reuters data.
About 60 percent of stocks traded on the New York Stock Exchange closed higher while on the Nasdaq, 59 percent of stocks closed higher.
Volume was light, with about 5.33 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year's daily average of 7.84 billion. — Reuters
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