Stocks surge thanks to good news on jobs, Europe and China
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Stock markets surged around the world thanks to a quick succession of promising economic news announcements, including a new effort by central banks to help struggling European economies.
The Dow Jones industrial average rose 390.76, or 3.4% to 11,946.39 immediately after the opening bell. Leading indexes were up 4.2% in Germany and 3.3% in France.
‘The financial markets have been treated to a raft of constructive news since late last night,’ Steve Ricchiuto, the chief U.S. economist for Mizuho Securities, wrote in a note to clients Tuesday morning.
The good news began flowing in last night when China announced that it would lower the amount of money that banks have to hold in reserve. This should help stimulate the economy by making banks more willing to lend.
As European markets opened, the Federal Reserve, the European Central Bank and three other central banks unveiled a new program to increase access to dollars for struggling European banks. The move is designed to make it easier for European banks to access funds at a time when fears about the European debt crisis have led to a freeze in liquidity.
Finally, in the United States, the payroll company ADP said just before markets opened that private sector companies in the U.S. had added 206,000 new employees in November. That is almost 100,000 more than they added in October, and also nearly 100,000 more than analysts had expected. The figures allay fears that the job market has ground to a halt. It also suggests that the rise in consumer spending seen over the Thanksgiving weekend may continue.
‘Better labor market conditions, combined with the reported jump in consumer confidence in November is the likely driver behind retailer reports of a strong start to the holiday shopping season,’ economists from Nomura Global Economics wrote to clients.
Markets are rising for the second straight day after over a week of big declines. The Standard & Poor’s 500 index was recently up 3.3%, or 39.67 points, to 1,234.86.
-- Nathaniel Popper