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Stocks soar as Irish financial worries ease

Stocks bounded higher Thursday thanks to a jump in manufacturing activity and growing confidence that Ireland will resolve its debt crisis.
/ Source: The Associated Press

Stocks bounded higher Thursday thanks to a jump in manufacturing activity and growing confidence that Ireland will resolve its debt crisis.

Most eyes were glued on General Motors, an American icon which re-emerged from bankruptcy in the largest initial public offering in U.S. history. Its shares, trading under the symbol GM, rose 3.6 percent to $34.19. GM's stock amounted to 9.7 percent of all shares traded on the New York Stock Exchange.

Stocks got an early boost from a surprisingly strong reading on manufacturing from the Federal Reserve Bank of Philadelphia. The report said factory orders in the mid-Atlantic region expanded at the fastest rate since December.

"The Philly Fed data shows that the economy had been getting better on its own without the Fed's help," said Michael Strauss, the chief economist for Commonfund, referring to a stimulus plan by the Federal Reserve announced Nov. 3. The Fed is buying up to $600 billion worth of bonds through the spring. The tactic is intended to spur spending by pushing interest rates down.

The manufacturing report helped industrials and materials companies. Aloca Inc. jumped 3.4 percent, making it the biggest gainer among the 30 stocks that make up the Dow Jones industrial average. General Electric Co. rose 1.5 percent and Caterpillar Inc. rose 2.4 percent. Intel Corp. was the only stock in the Dow to fall.

The Dow Jones industrial average rose 173.35, or 1.6 percent, to close at 11,181.23. It was the Dow's first gain in three days. Thanks to a 178-point plunge on Tuesday on worries about Ireland's debt crisis and a slowdown in China, the Dow is still down 0.1 percent for the week.

The broader Standard and Poor's 500 index rose 18.10, or 1.5 percent, to 1,196.69. The technology-focused Nasdaq composite index rose 38.39, or 1.6 percent, to close at 2,514.40.

All ten industry groups within the S&P index rose, with industrial and materials stocks posting the largest gains. Sears Holdings Corp. sank 3.8 percent after reporting that its loss nearly doubled in the third quarter on weak sales. Shares of Delta Air Lines jumped 4.2 percent the same day that its baggage handlers voted to reject forming a union.

Shares jumped in Europe after Ireland moved closer to accepting financial assistance from the European Union. Ireland has nationalized three of its six local banks following a collapse of the country's real estate market.

If it accepts outside help, Ireland will become the second European country to need a bailout this year. Greece came close to fiscal collapse in May and had to be rescued by other European countries and the International Monetary Fund. Fears that Greece's fiscal morass would undermine the euro and lead to bailouts of other European countries brought stock prices down around the world in May and early June.

Ireland is also expected to accept a loan worth tens of billions of euros from Great Britain. While Britain isn't one of the 16 nations that uses the euro, its banks have large holdings of Irish government debt and would face major losses if the country defaulted.

The Euro Stoxx 50 index, which tracks blue chip companies in the euro zone, gained 1.4 percent.

Bond prices fell, pushing their yields higher. The yield on the 10-year Treasury note rose to 2.90 percent from 2.87 percent late Wednesday. The yield on the note, which is a widely used benchmark for consumer and business loans, traded as low at 2.49 percent on Nov. 4.

The dollar fell 0.6 percent against an index of six currencies.

Five shares rose for every one that fell on the New York Stock Exchange. Consolidated volume was 4.7 billion shares.