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U.S. stocks rose, extending the biggest monthly rally since 1987 for the Standard & Poor’s 500 Index, as European leaders agreed to expand a bailout fund to $1.4 trillion and American economic growth accelerated. Global stocks rallied as European leaders cajoled bondholders into accepting 50 percent writedowns on Greek debt and boosted their rescue fund’s capacity to 1 trillion euros ($1.4 trillion) in a crisis-fighting package intended to shield the euro area. Measures include recapitalization of European banks, a potentially bigger role for the International Monetary Fund, a commitment from Italy to do more to reduce its debt and a signal from leaders that the European Central Bank will maintain bond purchases in the secondary market.
Stocks also rose after the U.S. economy grew in the third quarter at the fastest pace in a year as gains in consumer spending and business investment helped support a recovery on the brink of faltering. Separate data showed that fewer Americans filed applications for unemployment assistance last week, while those on benefit rolls dropped to a three-year low, signaling limited improvement in the labor market. The number of contracts to purchase previously owned U.S. homes unexpectedly fell in September as lower prices and borrowing costs failed to support demand, according to another report.
Dow 12,172.41 +303.37 +2.56%, Nasdaq 2,726.29 +75.62 +2.85%, S&P 500 1,277.83 +35.83 +2.88%
All 10 groups in the S&P 500 rose as gains were led by financial and commodity shares. Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) climbed at least 6.5 percent, following a rally in European lenders.
Alcoa Inc. (AA) and Caterpillar Inc. (CAT) jumped more than 4.8 percent to pace gains among companies most- dependent on economic growth. Alcoa, the largest U.S. aluminum producer, gained 7.8 percent to $11.17. Caterpillar increased 4.8 percent to $95.99.
Akamai Technologies Inc. climbed 14 percent to $27.22. The company, whose server network lets businesses speed data delivery, forecast fourth-quarter sales that topped some analysts’ estimates.
Aflac Inc. jumped 7.4 percent to $46.22. The world’s largest seller of supplemental health insurance reported profit that beat estimates and said sales were gaining in its largest market. The health insurer that gets more than 70 percent of its sales in Japan said third-quarter profit rose 7.8 percent as the yen strengthened against the dollar.
Avon Products Inc. erased 18 percent, the most in the S&P 500, to $18.89. The door-to-door cosmetics merchant said the U.S. Securities and Exchange Commission is investigating the company’s contacts with financial analysts. The company also reported profit that missed analysts estimates.
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