(XLK) Stock Market News for September 15, 2011 – Market News

Cross-Atlantic news and a positive turn of events guided the markets’ throughout Wednesday’s session, finally boosting the benchmarks to their third-straight days of gains. Initially, negative news from Austria seemed to threaten the markets, while Moody’s downgraded French banks. However, investors ignored these developments as the conference call among German Chancellor Angela Merkel, French President Nicolas Sarkozy and Greek Prime Minister George Papandreou spurred hopes of a resolution to the Greek debt crisis.

The Dow Jones Industrial Average (DJIA) surged 140 points or 1.3% to close at 11,246.73. The Standard & Poor 500 (S&P 500) gained 1.4% to finish the day at 1,188.68. The Nasdaq Composite Index climbed 1.6% and settled at 2,572.55. The fear-gauge CBOE Volatility Index (VIX) provided some respite, dropping 6% to trade roughly over 34.5. On the New York Stock Exchange (NYSE), Amex and Nasdaq, consolidated volumes were 8.5 billion shares, compared with last year’s average of roughly 7.6 billion. On the NYSE, for 11 stocks that moved up, only four stocks were in the red zone.

Initially the Dow plunged by 100 points after the Austrian Parliament reportedly voted against the upgraded bailout fund for Europe. Later, those concerns were settled as officials stated that the Parliament had not taken any such step and had merely declined to modify their agenda and will be conducting a special meeting to discuss the bailout fund.

Additionally, news that rating agency Moody’s had downgraded French banks Societe Generale and Credit Agricole seemed to be spoiling the party. Moody’s downgraded Societe Generale’s long-term debt and deposit rating by a notch to Aa3 and downgraded Credit Agricole by a notch to Aa1. Moody’s hinted at the possibility of further downgrading these ratings, while it made no changes to the rating of France’s largest bank BNP Paribas’s. Moody’s cited the exposure of the two banks to the Greek debt crisis as the reason behind its decision to downgrade.

However, investors had bigger and more significant news to focus on and they were greatly enthused by news that European leaders were combining their efforts to rescue Greece from its lingering debt issues. During the conference call that was scheduled yesterday, German Chancellor Angela Merkel and French President Nicolas Sarkozy provided assurances that Greece would very much remain a part of the euro zone. However, Steffen Seibert, the spokesman for Angela Merkel, said German and French leaders also urged Greek to implement its already-agreed financial plans “strictly and effectively”. While Angela Merkel negated all speculations of Greece being shown the exit route from the 17-nation euro zone, the French leader assured all help to avoid a Greek default. Greek Prime Minister George Papandreou also participated in the conference call and according to Seibert: “The Greek prime minister has reaffirmed the absolute determination of his government to take all necessary measures to put into practice given commitments in its entirety”.

The French and German heads of state also referred to the July 21 summit of euro-leaders, which had devised additional plans in order to stabilize the euro-zone. On July 21, euro leaders had met in an emergency summit and prepared a draft. According to that draft, the European Financial Stability Facility (EFSF) fund is to be strengthened, making it more effective and flexible. After the proposed reforms, the EFSF will help states with precautionary loans, recapitalize banks and may also intervene in the secondary bond market. The leaders stressed on this plan to prevent a Lehman Brothers-style collapse. After the weekly cabinet meeting, Valerie Pecresse, French government spokeswoman said: “We must implement…the accord of July 21, all of it, and as quickly as possible”. Meanwhile, U.S. Treasury Secretary Timothy Geithner said he believes that European leaders will prevent a Lehman Brothers-like collapse, and stated: “I think they recognize how severe the challenges are right now and I think they recognize they’re going to have to do more to earn the confidence of the world”.

Moments after the conference call, US indices moved higher as investors enjoyed a much needed breather. Technology sector was one of the biggest gainers in the rally with the Technology Select Sector SPDR (XLK) Fund surging 1.5%. Bellwethers like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Google Inc. (NASDAQ:GOOG), Dell Inc. (NASDAQ:DELL), Oracle Corp. (NASDAQ:ORCL) and International Business Machines Corp. (NYSE:IBM) gained 1.2%, 1.8%, 0.5%, 3.3%, 1.6% and 2.3%, respectively.

Investors were so focused on European news that they chose to brush aside the disappointing domestic economic reports. The Commerce Department reported that business inventories had climbed a mere 0.4% in July from 0.3% in June, lower than expectations of an increase of 0.5%. Separately, the Department of Commerce also released the August Retail Sales report, which displayed no change in August, contrary to expectations of a 0.2% hike. Retail sales in July had climbed 0.5%.

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