(AXP) Stock Market News for November 4, 2011 – Market News

Greecereversed its call for a referendum on the European debt deal that calmed nerves and helped the markets log their second consecutive days of gains. A drop in weekly jobless claims further added to the cheer coupled with the European Central Bank’s decision to reduce the interest rate to 1.25%. However, fears of Greek Prime Minister George Papandreou stepping down ensured that trading was somewhat volatile.

Sticking to its trend of posting three-digits movement, the Dow Jones Industrial Average surged 208 points or 1.8% to settle at 12,044.47. The Standard & Poor 500 (S&P 500) moved above the 1, 250 mark, jumping 1.9% to close the day at 1,261.15. The tech-laden Nasdaq Composite gained 2.2% and signed off at 2,697.97. The fear-gauge CBOE Volatility Index dropped 6.8% hinting at receding fears, but still hovered slightly above 30, a key level for the fear-gauge index. On the New York Stock Exchange (NYSE), Amex and Nasdaq, consolidated volumes were roughly 8.38 billion shares, marginally lower than last year’s daily average of 8.47 billion. On the NYSE, for one stock that declined, four stocks moved upwards.

The Dow moved above the psychological level of 12, 000 with none of its 30 components having to close in the red. American Express Company (NYSE:AXP), Boeing Co. (NYSE:BA), Bank of America Corporation (NYSE:BAC), Walt Disney Co. (NYSE:DIS), Hewlett-Packard Company (NYSE:HPQ), Kraft Foods Inc. (NYSE:KFT), United Technologies Corp. (NYSE:UTX) and Exxon Mobil Corporation (NYSE:XOM) took the lead with gains of 2.7%, 2.8%, 2.8%, 2.8%, 3.6%, 3.3%, 2.0% and 1.9%, respectively.

A surprise move from Greece’ prime minister had sent the markets crashing on Monday. Yesterday, it was a different story after Greece backtracked on its call for a referendum. Speaking to party lawmakers, finance minister Evangelos Venizelos, announced the decision to call off a referendum. This comes as a welcome move for investors because a vote in the negative would have pushed Greece closer to a default.

Fresh concerns had started to emerge from the European continent after in a surprise move George Papandreou called for a referendum on the European debt plan late on Monday. Such a move had the potential to jeopardize the entire global economy and experts believed that rejecting the bailout plan might lead to a “hard default” by Greece. Meanwhile, sources told a media house that the European Union and International Monetary Fund will not be providing Greece with a €8 billion payment till the referendum takes place. Investors will now look ahead to the G20 leaders meet in France.

However, things seemed to have turned for the better post the reversal of the earlier decision. Nevertheless, trading was marked by anxiety over the political turmoil in the Greece land. Investors have begun to worry over the possibility of George Papandreou resigning from office, even if he wins a vote of confidence in parliament. Reports from news agencies stated that the leader had been unwilling to discard the plan for the referendum, and has now decided to pave way for finance minister Evangelos Venizelos.

While markets’ rally strengthened after these new developments, the benchmarks had already opened in the green, spurred by ECB’s announcement that it was reducing the benchmark interest rate by a quarter of a percentage point to 1.25%. The move comes after Mario Draghi joined the bank as its head this week. Earlier this year the bank had upped the interest rate twice.

Economic data also kept optimism alive after the U.S. Department of Labor reported the advance figure for seasonally adjusted initial claims to have decreased 9,000 from the previous week’s revised figure of 406,000, to 397,000 for the week ending October 29. This was higher than the consensus estimate of 399, 000 for the current period. In an encouraging development, the figure has crept below the key level of 400, 000, which has rarely happened this year. The data follows Wednesday’s report from Automatic Data Processing according tow which 110,000 new jobs were added by US companies in October. Economists had predicted a gain of roughly 100,000. Investors will now look forward to the significant non-farm payroll data scheduled to be released on Friday by the Labor Department.

Data from the Institute for Supply Management was not quite as encouraging but investors chose to focus on the positives. According to the report from the Institute for Supply Management Non-Manufacturing Business Survey Committee: “The NMI registered 52.9 percent in October, 0.1 percentage point lower than the 53 percent registered in September, and indicating continued growth at a slightly slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased 3.3 percentage points to 53.8 percent, reflecting growth for the 27th consecutive month”. The figure is also lower than the consensus estimate of 53.7.

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DISNEY WALT (DIS): Free Stock Analysis Report

HEWLETT PACKARD (HPQ): Free Stock Analysis Report

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UTD TECHS CORP (UTX): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

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