Deflated Balloon

Fear is fading out of the markets as the European picture becomes more clear.

First, the scoreboard:

Dow: +102, +0.9%
S&P 500: +12, +1.0%
NASDAQ: +21, +0.8%

And now, the top stories:

  • If you looked only at the major indices, you probably wouldn’t have known earnings season kicked off on a disappointing note.  Alcoa reported earnings of 15 cents per share, sharply missing analysts’ estimate of 22 cents per share. The company painted a pretty bleak picture of Europe.
  • However, Europe’s picture may soon improve. Word out of Slovakia indicates that leaders will pass the EFSF expansion later this week. Markets applauded this news sending U.S. stocks higher.
  • European markets closed on a high note as the euro surged against the dollar.
  • As usual, U.S. bank stocks benefited from the improving picture in Europe. Citigroup and Bank of America both jumped. Morgan Stanley gained 3%. JP Morgan, which announces quarterly earnings Thursday morning, climbed 3%.
  • In other earnings news, PepsiCo reported Q3 earnings just barely ahead of expecations as strong revenue more than offset higher costs.  Shares closed up 3%.
  • Industrial and precious metals also booked big gains today, led by a 3% jump in copper prices. Miners Southern Copper and Freeport-McMoran saw shares rise 3% and 2%, respectively.
  • Amidst the bull rally in risky assets, the Treasury had its worst 10-year note auction in nearly a year with the yield climbing to 2.27%.
  • Another area of weakness was agricultural commodities, which reacted to a USDA report that indicated higher than expected supply. Wheat plunged by 6%, erasing most of yesterday’s gains.
  • FOMC minutes came out today. During the September meeting, some members had favoured more more quantitative easing, even suggesting expansion of the Fed’s balance sheet.  The committee also cut its outlook for U.S. GDP growth.
  • Meanwhile, Research In Motion fell 2% as the company’s BlackBerry network outages spread into North America.
  • In other corporate news, Liz Claiborne announced it would be selling off its brands for $328 million. Shares soared.
  • Don’t Miss: Nouriel Roubini’s $1.2 Trillion Plan To Save The Entire World

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