Stocks jump in third straight day of gains
The Dow gained 140.88 points to close at 11,246.73 as hopes for progress on Greece's debts pushed stocks higher.
Henry Ray Abrams/AP
A promise by European leaders to help Greece avoid default sent stocks sharply higher Wednesday, the third day of gains in a row.
The leaders of Greece, France and Germany agreed in a teleconference that Greece was an "integral" part of the 17-country bloc that uses the euro. Greece also said it would stick to agreements to trim its debts, a condition for getting more financial help. The statements were intended to calm fears that Greece was headed for default or might be forced to drop the euro.
The Dow Jones industrial average rose 140.88 points, or 1.3 percent, to close at 11,246.73. It was another day of choppy trading in the stock market. The Dow sank as many as 112 points within the first hour of trading, then rose steadily through the rest of the day.
"The news out of Europe is beginning to sound a bit more friendly," said Peter Cardillo, chief market economist at Rockwell Global Capital, a brokerage in New York. Investors remain far from convinced that Europe's debt crisis will be solved. "Once they are, some of this fear will dissipate."
European stock indexes rose sharply in the hours leading up to the meeting as investors hoped the talks would be productive. Germany's DAX gained 3.4 percent and France's CAC-40 1.9 percent.
The threat of a Greek default and the damage it could wreak on financial markets has had investors on edge in the past two weeks, lifting Treasurys and weighing on stocks. The yield on the 10-year Treasury note hit a record low on Monday of 1.87 percent and the S&P 500 has only risen three days this month.
Uri Landesman, president of the New York hedge fund Platinum Partners, said worries over Greece have gone too far. Landesman thinks European countries won't let a Greek default create a larger financial crisis. "They're just not going to let them go under," he said. "That's just not happening. I think people have learned the lesson from letting Lehman Brothers fail."
German Chancellor Angela Merkel distanced herself from comments this week by her vice chancellor and others who suggested a Greek bankruptcy was possible. European finance ministers will meet on Friday in Poland.
ConAgra Foods Inc. said it would withdraw its $5.17 billion bid for Ralcorp Holdings Inc. if the company doesn't consider its bid by Monday evening. Ralcorp has already rejected several bids from ConAgra since March. Ralcorp's stock dropped 7 percent to $79.11. ConAgra fell 2 percent to $23.45.
Computer maker Dell Inc. rose 3 percent to $14.86. Dell said Tuesday it will add $5 billion to its existing $2.1 billion stock-buyback plan. Dell bought $1.1 billion of its stock in the second quarter.
Staples Inc. rose 3 percent to $14.60 after the company said it will buy up to $1.5 billion of its own stock. The office-supply company's stock has dropped 36 percent this year.
The gains came despite a report that retail sales were flat in August. People spent less on autos, clothing and furniture as fears mounted that the country was slipping into a recession and as the stock market took a steep fall. Economists had expected a slight gain.
That report helped push oil prices down $1.30 to $88.91 a barrel. Weak retail spending suggests Americans will consume less fuel.
All three stock indexes are still down for the month. The Dow has lost 3.2 percent and the S&P 500 index 2.5 percent. The Nasdaq has fared better, losing just 0.3 percent.