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Broad Gains for Global Stocks

by on July 26, 2012 3:30 pm BST
 

NEW YORK—Europe’s top central banker sparked a stock-market rally after reassuring investors the European Central Bank will be vigilant about holding together the euro zone.

The Dow Jones Industrial Average climbed 188 points, or 1.5%, to 12862 in Thursday morning trading. The Standard & Poor’s 500-stock index surged 18 points, or 1.4%, to 1356 and the Nasdaq Composite Index added 39 points, or 1.4%, to 2893.

Will Facebook beat or disappoint analysts with its first earnings results? David Benoit previews analyst expectations on Markets Hub. Photo: Bloomberg.

All 10 of the S&P 500’s sectors gained; telecommunications and technology companies paced the rally.

Shares of 3M

led all 30 of the Dow’s blue chips higher as the company’s second-quarter earnings topped analyst estimates, and it maintained its full-year outlook.

Zynga plunged after the videogame maker missed second-quarter expectations and slashed its outlook for the year, citing delays in launching new games and a more challenging environment on Facebook

. Shares of that social-media giant sank ahead of its first quarterly earnings report as a publicly traded company, due after Thursday’s close.

Zynga Stock Pummeled on Earnings Loss

4:39

On Wednesday, online games maker Zynga showed its vulnerability as the company’s stock plunged 40% following weak quarterly results. George Stahl has details on The News Hub. Photo: Reuters.

But the real fuel for Thursday’s gains came from Mario Draghi, who said the ECB is ready to do whatever it takes to preserve the common-currency union. The central bank president indicated the ECB’s willingness to restart bond purchases at a time when Spanish government bond yields have hit all-time highs.

European markets turned sharply higher after the statement, and the Stoxx Europe 600 jumped 2.3%.

Mr. Draghi’s statement was “very emphatic, and it was clearly meant to dispel some of the panic,” said Christian Bertelsen of Global Financial Private Capital.

[image]European Pressphoto Agency

ECB President Mario Draghi

“Watching Europe has been a like watching reruns, and I’ve been a little cynical about enthusiasm [about statements from leaders] wearing thin. But [Draghi’s comments] show that they aren’t going to allow a collapse,” he added.

Investors also were encouraged by a pair of better-than-expected economic reports. A reading from the Labor Department showed the number of U.S. workers filing for unemployment benefits fell for the fourth time in five weeks, to a level that was far lower than expected. At the same time, orders for durable goods rose in June more than was forecast on a surge of aircraft sales.

Asian markets were mostly higher, with Japan’s Nikkei Stock Average rising 0.9% to snap a four-session losing streak. But China’s Shanghai Composite slipped 0.5% to close at the lowest level seen since March 2009.

Crude-oil futures climbed 1.3% to $90.16 a barrel, while gold futures gained 0.7% to $1618 a troy ounce. The U.S. dollar fell against the euro, but edged up against the yen. The yield on the 10-year U.S. Treasury rose to 1.431% as demand fell.

Among other stocks, United Technologies

rose after the conglomerate agreed to sell some industrial products businesses to BC Partners and The Carlyle Group

for $3.46 billion.

Exxon Mobil

firmed after the company reported second-quarter earnings rose 49%, although exploration and production profits fell on lower energy prices and production.

Sprint Nextel

surged after the telecom company reported a narrower-than-expected second-quarter loss on higher-than-anticipated revenue and a gain in contract subscribers.

Dow Chemical

fell after the company’s second-quarter earnings and revenue missed estimate, citing declining prices resulting from a slowdown in global economic growth.

Western Digital

jumped after the hard-disk drive maker reported fiscal fourth-quarter results that were well above forecasts and provided an upbeat outlook for the current fiscal year.

Whole Foods Market

rallied after the grocer reported fiscal third-quarter earnings that topped estimates and raised its full-year outlook.

Energy partnership Northern Tier Energy

struggled to post gains in its stock-market debut.

Write to Chris Dieterich at chris.dieterich@dowjones.com