The Dow Jones industrial average rose by more than 100 points for a third straight day last Thursday after US retailers reported stronger September sales and the European Central Bank moved to support eurozone lenders.
The Dow jumped 183 points, bringing its three-day gain to 434.
In Europe, investors cheered a promise from the ECB to provide unlimited one-year loans to the region’s lenders through to 2013.
The goal is to shield banks from poorly functioning short-term credit markets, in which banks are becoming too worried about their financial stability to lend money to each other. Germany’s DAX jumped 3.2 per cent, and France’s CAC-40 rose 3.4 per cent.
The loans are also meant to help protect the banks should Greece’s government default on its debt. If that happens the value of Greek bonds held by those banks would be likely to drop sharply, weakening the banks’ balance sheets and making it harder for them to lend.
Target, Nordstrom, Macy’s and other US retailers reported sales that beat Wall Street’s expectations. While some of the sales were driven by deep discounts, analysts said the higher sales suggested the US economy was not in another recession.
“The market has been pricing in an out-and-out recession, but the fact that consumer spending is holding up shows that we’re more likely to continue muddling through at a one to two per cent growth rate,” said Brian Gendreau, market strategist at Cetera Financial Group.
The Dow Jones industrial average jumped 183.38 points, or 1.7 per cent, to 11,123.33. It was the first time the Dow rose by more than 100 points for three straight days since a rally that began on August 11 and ended with a 763-point gain.
It was the ninth straight day the Dow has swung by more than 100 points, the longest such streak since November 2008, in the middle of the financial crisis. Markets have been extraordinarily volatile as investors react to the latest headlines from Europe.
The S&P 500 rose 20.94, or 1.8 per cent, to 1,164.97. The Nasdaq composite rose 46.31, or 1.9 per cent, to 2,506.82.
Banks in Europe and the US rallied. US bank stocks rose sharply after Treasury Secretary Timothy Geithner told a Congressional panel that US financial firms had a “very modest” exposure to Europe’s debt problems. Bank of America jumped 8.9 per cent to $6.28 (€4.67). Morgan Stanley rose 4.8 per cent to $15.18.