(CSCO) Stock Market News for October 6, 2011 – Market News

Investors pinned their hopes on a possible European coordinated action to contain the continent’s debt amid encouraging domestic economic reports that led the benchmarks higher to a green finish. Earlier this week the S&P 500 had briefly moved into the bear-market territory, but the index recovered and with yesterday’s gains the index logged its best two-day gains in a month.

The Dow Jones Industrial Average (DJIA) gained 1.2% to settle at 10,939.95. The Standard & Poor 500 (S&P500) was up 1.8% and closed the day at 1,144.04. The Nasdaq Composite Index gained 2.3% and finished the day at 2,460.51. The fear-gauge CBOE Volatility Index (VIX) moved below 38. However, the fear-gauge index is still hovering significantly over the key-level of 30, indicating the prevailing high level of fear among investors. On the New York Stock Exchange, Amex and Nasdaq, consolidated volumes were 9.7 billion shares, decently over this year’s daily average of 8 billion shares. On the NYSE, for 11 stocks that gained, 4 stocks were on the losing side.

News from the European continent has consistently dampened the moods here, with news of positive developments about the region’s debt crisis coming in patches to boost the markets’ momentum. Yesterday was one such occasion where reports of European finance ministers working out ways to shore up the lenders helped the markets end higher. Additionally, reports of Franco-Belgian lender Dexia being restructured that will restrict negative impact on other banking sector also upped the mood.

This development comes right a day after a Financial Times article reported Olli Rehn, European Union Economic and Monetary Affairs Commissioner, to have said that there is an “increasingly shared view” that the continent is in dire need of coordinated action to tackle the debt concerns. Earlier this week, at a meeting in Luxembourg, European finance ministers had concluded an agreement on new economic governance rules for the euro zone. Following the meet, Olli Rehn had said: “These are powerful tools for fundamentally changing the way the Economic and Monetary Union is governed …. These will enable us to ensure sustainable public finances, to pre-emptively address economic imbalances and to correct the looming problems before the risk spreads and the crisis is there…. Mark my words: I will not hesitate to fully apply the new rules with vigor from the first day these tools enter into force”.

However, these positives came in while Moody’s Investors Service downgraded Italy’s government bond rating. On Tuesday, the rating agency chopped Italy’s rating from Aa2 to A2 with a negative outlook.

Nonetheless, the investors concentrated only on the positives and chose to overlook the Italy’s downgrade. Additionally, they also cheered the positive economic reports that painted rosier picture for the jobs market and the economic activity.

Report from Automatic Data Processing, Inc. (NASDAQ:ADP) showed that US companies added 91, 000 jobs for the month of September. Economists had predicted the job addition to count to 75, 000. The jobs addition in September also rose from August’s level of 89, 000.

Separately, Institute for Supply Management reported: “The NMI registered 53 percent in September, 0.3 percentage point lower than the 53.3 percent registered in August, and indicating continued growth at a slightly slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased 1.5 percentage points to 57.1 percent, reflecting growth for the 26th consecutive month. The New Orders Index increased by 3.7 percentage points to 56.5 percent”.

The technology shares were among the ones who gained the most yesterday. Bellwethers like Hewlett-Packard Company (NYSE:HPQ), Yahoo! Inc. (NASDAQ:YHOO), Microsoft Corporation (NASDAQ:MSFT), Oracle Corp. (NASDAQ:ORCL) and Cisco Systems, Inc. (NASDAQ:CSCO) gained 3.7%, 10.1%, 2.2%, 2.9% and 3.7%, respectively.

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