(EU) Stock Market News for December 12, 2011 – Market News

Signs of a resolution to the lingering European debt crisis in the offing and a positive consumer data on the domestic front boosted the benchmarks on Friday. Thus, the markets elongated its weekly gains to the second-straight week and the S&P 500 recorded its longest stretch of weekly gains since October.

The Dow Jones Industrial Average (DJIA) gained 186 points or 1.6% to settle at 12,184.26. The Standard & Poor 500 (S&P 500) surged 1.7% and finished the day at 1,255.19. The Nasdaq Composite Index closed substantively higher at 2,646.85, after jumping 1.9%. While investors felt largely comfortable over the European developments, the fear-gauge CBOE Volatility Index (VIX) plunged almost 14% to close the day 26. 83. Thus, reflecting subdued fears in the markets, the fear-gauge index was comfortably below the key level of 30. Total volume on the New York Stock Exchange (NYSE) was 3.82 billion shares. The advancing stocks outperformed the decliners, as for 83% stocks that were on the advancing side, there were 14% stocks that declined. Around 3% stocks remained unchanged.

On Friday, the support of the European nations, except Britain, to adhere to stricter budgetary norms led the markets higher. However, before getting on with Friday’s events, we certainly need to have a look at the developments through the week that had enabled the benchmarks’ second week of victory. Looking into the weekly performances, the Dow, S&P 500 and the Nasdaq climbed 1.4%, 0.9% and 0.8%, respectively.

Since Monday last week, the cross-Atlantic region kept providing something positive or the other and helped the rally dominate the prevailing concerns. On Monday, markets were boosted after German Chancellor Angela Merkel and French President Nicolas Sarkozy called for changes to the European Union treaty that would allow for stronger fiscal discipline, integration and budget alignment across the eurozone. On Tuesday, it was the Financial Times’ report that suggested the Euro officials are devising a financial “bazooka.” Euro-leaders were reportedly devising two bailout funds that they will be put on track. Additionally, it was the hopes of a positive outcome from the European Summit that had kept the sentiments buoyant throughout last week, and more so on Wednesday, as the European leaders commenced their meet on Thursday, in search of a definite solution to the lingering and mostly damaging European debt situation.

However, the week was not without the headwinds also. On Monday, it was Standard & Poor’s announcement that it will put euro-using nations, along with economies like Germany and France, under “creditwatch negative”. On Tuesday, concerns lingered in the background, with the possibility of the European Financial Stability Facility (EFSF) losing its credit rating. A possibility, if, according to Standard & Poor’s (S&P’s), any of the six ‘AAA’ rated European country face a downgrade. Also on Wednesday afternoon, Standard & Poor’s had put the European Union’s ‘AAA’ rating on negative watch. On Thursday, markets suffered heavy battering as European Central Bank President Mario Draghi hinted at not providing broad support to the troubled European nations.

Nonetheless, when the actions moved on to Friday, it was all positive, as all the concerned European nations voiced their support in favor of the tighter budgetary measures, discounting the British opposition. The European Union Council President Herman Van Rompuy said that all of the European Union (EU) nations apart from U.K. will join the 17-euro members and draft a new inter-governmental treaty for tighter fiscal policies.

At the EU summit, while almost all the euro-zone members agreed to adhere to the norms that the France and German leaders had earlier rolled out, British Prime Minister David Cameron said that his country will not benefit from the deal interest and thus will opt out of it. He was also reported to have said that Britain will not join the single currency, and that led to sever criticism from different corners.

Meanwhile, the nations who agreed to the fiscal norms, also conformed to the idea of European Court of Justice possessing the right to outwash national laws of nations who do not adhere to the measures.

Also on Friday, domestic data came in positively to add to the gains. The Commerce Department reported the US trade deficit to have sunk to the lowest levels in 10 months. In the report, The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced: “Total October exports of $179.2 billion and imports of $222.6 billion resulted in a goods and services deficit of $43.5 billion, down from $44.2 billion in September, revised. October exports were $1.5 billion less than September exports of $180.6 billion. October imports were $2.2 billion less than September imports of $224.8 billion”.

Separately, according top to the Thomson Reuters/University of Michigan’s preliminary reading, consumer sentiment climbed to 67.7, topping the consensus estimates of 65.6. It was the fourth-consecutive month that the index posted gains.

As for the performances of the individual sectors, the financial sector enjoyed substantial gains and Financial Select Sector SPDR (XLF) fund was up 2.0%. Stocks including Bank of America Corporation (NYSE:BAC), Citigroup, Inc. (NYSE:C), JPMorgan Chase & Co. (NYSE:JPM), The Goldman Sachs Group, Inc. (NYSE:GS), Morgan Stanley (NYSE:MS) and Wells Fargo & Company (NYSE:WFC) jumped 2.3%, 3.7%, 3.0%, 1.5%, 3.2% and 2.8%, respectively.

BANK OF AMER CP (BAC): Free Stock Analysis Report

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GOLDMAN SACHS (GS): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

MORGAN STANLEY (MS): Free Stock Analysis Report

WELLS FARGO-NEW (WFC): Free Stock Analysis Report

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