Nov. 7, 2011 at 4:07 PM ET
By msnbc.com news services
The stock market mostly recovered from investors’ fears about Europe’s debt crisis Monday. After trading lower for most of the day, the major indexes ended slightly higher.
The Dow rose 85.15 points, or 0.7 percent, to close at 12,068.39. The Dow closed near its highest point of the day and had down as many as 102 points shortly after midday.
The Standard & Poor's 500 index rose 7.89, or 0.6 percent, to 1,261.12. Last week the S&P had its first down week since September. The Nasdaq rose 9.10, or 0.3 percent, to 2,695.25.
Italian Prime Minister Silvio Berlusconi, under pressure from markets and rebels in his party, fought to hang on to power and denied reports he would resign. Party rebels threatened to bring down his government in a backlash over its failure to adopt reforms to defuse a debt crisis.
Italy's borrowing rates spiked Monday to the highest level since the country adopted the euro. Unlike Greece, Portugal or Ireland — all of which received financial lifelines — Italy has too much debt to be rescued by its European neighbors. Prime Minister Silvio Berlusconi has rejected suggestions that he resign to make way for more cost-cutting.
Italy’s public debt, by percentage, is one of the largest of any country in the world.
"As soon as Greece looks like we can now sort of digest the risk right off the issues, in comes the 800-pound gorilla into the room. Italy is a much, much larger concern, with issues that have been lingering for decades," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.
"This is not something you can cordon off. Italy is central to the European zone and it is going to force the European Union to recalibrate everything that has been taken for granted thus far in the conversation."
Monday is a relatively quiet day for economic and corporate news in the U.S. The Federal Reserve will report in the afternoon on how much consumers borrowed in September. Economists expect consumers took out an additional $5.4 billion in loans, a sign that households could be more confident in the direction of the economy.
"Every day it seems like it's the butting of heads between whatever the latest rumor is out of Europe with good economic data and corporate earnings," Karyn Cavanaugh, a market strategist with ING Investment Management, told the Associated Press. "It's overshadowing the fact that earnings are on track to be the best year ever."
Adam Parker, of Morgan Stanely, discusses how the escalating sovereign debt crisis in Europe has impacted U.S. earnings on CNBC.