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U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a second day, as the European Central Bank unexpectedly cut rates and the region’s leaders increased pressure on Greece to accept a bailout.
The ECB unexpectedly cut interest rates at President Mario Draghi’s first meeting in charge after euro-area leaders raised the prospect of Greece exiting the monetary union, sending bond yields soaring in Italy and Spain. Stocks extended gains after the Associated Press reported that Greece’s plan to hold a referendum on its bailout has been scrapped.
European leaders for the first time raised the prospect of the euro area splintering, forcing debt-stricken Greece to decide whether it’s in or out when it holds a referendum on a bailout package next month. German and French leaders holding emergency talks on the eve of a Group of 20 summit today in Cannes, France, withheld 8 billion euros ($11 billion) of assistance.
Earlier today, stocks rose after BBC reported that Papandreou would step down and propose a coalition government headed by former European Central Bank vice-president Lucas Papademos, without saying how it got the information. Later, two officials with the ruling Pasok party said Papandreou won’t resign his post and plans to speak in Parliament in Athens today as scheduled.
Dow 11,951.23 +115.19 +0.97%, Nasdaq 2,667.70 +27.72 +1.05%, S&P 500 1,249.32 +11.42 +0.92%
Qualcomm jumped 6.6 percent to $55.65. The company, which gets most of its profit from licenses on technology used in so- called 3G phones, is benefiting as more consumers switch to the technology -- especially in developing countries. Widening use of smartphones fuels growth in royalty revenue and sales of cellular radio chips and processors.
Kraft Foods Inc. (KFT), the food company planning to split in two next year, added 3.7 percent after raising its earnings forecast. Chief Executive Officer Irene Rosenfeld plans to spin off the North American grocery business by the end of next year to focus on selling snack foods in emerging markets. Food companies such as Kraft, Sara Lee Corp. and General Mills Inc. have raised prices on many products this year to make up for higher costs for ingredients such as corn, coffee and sugar.
Estee Lauder Cos. jumped 14 percent to $114.71. The maker of Clinique and Bobbi Brown makeup lines announced plans for a 2-for-1 split. The New York-based company also said it will increase its annual dividend by 40 percent to $1.05 a share.
Jefferies Group Inc.pared its loss to 9.1 percent as it said it has no “meaningful net exposure” to European sovereign debt after its shares plunged as much as 20 percent earlier today, triggering stock-market circuit breakers. Egan-Jones Ratings Co. downgraded the firm’s creditworthiness to BBB- from BBB, citing “a changed environment” after the collapse of MF Global Holdings Ltd. and saying it was concerned about the size of Jefferies’ $2.7 billion in “sovereign obligations” relative to the investment bank’s equity.
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