Friday, October 28, 2011

S&P 500 Extends Biggest Monthly Rally Since 1974 on Europe Deal

U.S. stocks rose, extending the biggest monthly rally since 1974 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.

Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) advanced at least 8.3 percent, following gains in European lenders. The Dow Jones Transportation Average, a proxy for the economy, jumped 4.5 percent. The index extended its October rally to 20 percent and is poised for its best monthly gain since 1939. Alcoa Inc. (AA) and General Electric Co. climbed more than 6.2 percent to pace gains in companies most-dependent on economic growth.

The S&P 500 rose 3.4 percent to 1,284.59 at 4 p.m. New York time, erasing its 2011 loss and rising to the highest level since Aug. 1. The gauge has climbed 14 percent so far in October. The Dow Jones Industrial Average added 339.51 points, or 2.9 percent, to 12,208.55. The Russell 2000 Index of small companies rallied 5.3 percent and is up 19 percent in October. About 11.9 billion shares changed hands on U.S. exchanges at 4:30 p.m., or 29 percent above the three-month average.

“This sort of half-baked solution out of Europe comes at a good time,” Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees $1 billion, said in a telephone interview. “The market simply wanted to say -- OK, we’ll give them a chance to work things out. They can mess it up, but my best guess is we put this behind us.”

Concern over Europe’s debt crisis sent the S&P 500 to a one-year low earlier this month. The index came within 1 percent of extending its decline from its April peak to 20 percent, the common definition of a bear market. Since then, it has risen 17 percent on optimism Europe would contain its crisis. (more)

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