Facebook Twitter

Stocks extend gains after fears about Europe ease

SHARE Stocks extend gains after fears about Europe ease

NEW YORK — Stocks extended their comeback to a second day Tuesday on relief over the European Union's bailout program for its weaker members.

The Dow Jones industrial average rose about 45 points. Treasury prices fell for a second day after demand for safety investments eased.

Investors set aside some of their fears that problems in weaker European countries will disrupt the global economic recovery. Analysts say traders are again giving greater weight to the stronger economic picture in the U.S.

"We've taken the panic out of the market," said Paul Zemsky, head of asset allocation at ING Investment Management in New York. "In the U.S. market the fundamentals are clearly good."

Zemsky also said the market was ready to resume its climb after the recent correction. The benchmark Standard & Poor's 500 index fell 12.6 percent from its recent peak to last Thursday when the market was tumbling on fears about Greece's debt.

The bailout helped reassure investors that European countries would act decisively to protect the euro. However several weaker countries will still have to make deep spending cuts to rebuild confidence in the euro, which could slow a recovery in Europe's economy.

Asian markets retreated after a report showed inflation in China accelerated last month. China has already spooked markets by clamping down on bank lending to cool its economy, and investors worried that the inflation report could lead Chinese authorities to tap the brakes on its huge economy again. That could hurt U.S. and other companies that do business with China.

Global economic indicators, such as the U.S. government's monthly jobs report, had been overshadowed recently as investors feared debt problems in Greece would spread through Europe. Traders were also concerned about how much European debt woes would hurt the euro, the currency used by 16 European countries.

In midafternoon trading, the Dow rose 46.55, or 0.4 percent, to 10,831.69. The S&P 500 index rose 6.04, or 0.5 percent, to 1,165.77, while the Nasdaq composite index rose 23.87, or 1 percent, to 2,398.54.

The Dow jumped 405 points, or 3.9 percent, on Monday. The S&P 500 index surged 4.4 percent, while the Nasdaq composite index jumped 4.8 percent. It was the market's biggest jump since March 2009 and followed a tumble late last week.

Treasury prices were mixed again plunging on Monday as investors dumped safe investments following news of the European bailout. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.55 percent from 3.54 percent late Monday.

Crude oil fell 49 cents to $76.31 per barrel on the New York Mercantile Exchange.

The dollar rose and hovered near its strongest levels in 14 months against the euro. Gold rose.

Two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 852 million shares, compared with 1.1 billion traded at the same point Monday.

The Russell 2000 index of smaller companies rose 13.21, or 1.9 percent, to 702.82.

Britain's FTSE 100 fell 1 percent, Germany's DAX index rose 0.3 percent, and France's CAC-40 fell 0.7 percent. Japan's Nikkei stock average fell 1.1 percent.