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Stocks Close Higher, Dow Ends Above 12,000

Monday, 7 Nov 2011 | 4:26 PM ET

Stocks rebounded to close near session highs in a volatile session Monday, but gains were limited as investors continued to monitor headlines from the euro zone.

The Dow Jones Industrial Average jumped 85.15 points, or 0.71 percent, to close at 12,068.39, above the psychologically-important 12,000 mark.

Home Depot and Hewlett-Packard led the blue-chip gainers.

The S&P 500 gained 7.89 points, or 0.63 percent, to finish at 1261.12. The Nasdaq added 9.10 points, or 0.34 percent, to end at 2,695.25.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished below 30.

All 10 S&P sectors finished in the black, led by health care.

“You tell me where the euro is and I’ll tell you where stocks are trading,” said Alan Valdes, director of floor operations and VP of trading at DME Securities. “Volume’s also very light.”

Markets were volatile following reports that Italian Prime Minister Silvio Berlusconi was about to resign. Berlusconi denied the reports.

The Italian Prime Minister has one day to win over undecided members of parliament and stop a group of party rebels threatening to bring down his government in a backlash over its failure to adopt reforms to defuse a debt crisis.

Meanwhile, Greek Prime Minister George Papandreou sealed a deal with the opposition on a crisis coalition to approve an international bailout, but details remain thin despite an EU ultimatum for Athens to get serious about tackling its problems.

Meanwhile, Greece's new Prime Minister will be announced tomorrow.

Euro zone finance ministers meet in Brussels on Monday for a regular, scheduled meeting, but are likely to discuss the ongoing turmoil in the region.

Is Europe Hurting US Earnings?
Adam Parker, Morgan Stanely, discusses how the escalating sovereign debt crisis in Europe has impacted US earnings.

"If Europe goes into a recession, it would be a challenge for the global economy, but components of the European economy has been priced into the markets, so in spite of Europe’s troubles, U.S. equities may be more attractively priced now and may offer fulfilling future returns," said Lawrence Creatura, portfolio manager, Federated Investors.

“This has been a directionless, churning market for quite some time—We are in an environment of heightened volatility and historically, volatility doesn’t decline rapidly,” added Creatura. “Gains have come grudgingly and has been given right back as some of the macroeconomic data deteriorates. One positive element we have is the earnings season, which has been fairly good.”

Retailer Best Buy will pay $1.3 billion to buy its British partner Carphone Warehouse Group out of a fast-growing U.S. mobile phone venture, while abandoning plans for a chain of European megastores.

The move is the latest sign Best Buy is scaling back its overseas ambition, Reuters reported.

In other company news, General Motors is on track to double its annual tally to 5 million vehicles in China by 2015 despite slowing growth in the world's largest auto market, its China chief said.

MF Global is also still in the spotlight. CME Group and IntercontinentalExchange moved over the weekend to limit the fallout from the MF Global Holdings bankruptcy on futures markets by lowering margin requirements on some accounts.

Jefferies was slightly higher after the company reduced its gross holdings of the sovereign securities of Portugal, Italy, Ireland, Greece and Spain by almost 50 percent. Shares of the firm were hammered by sovereign-debt fears last week.

Barnes & Noble unveiled its updated Nook Tablet—a tablet/e-reader hybrid device, similar to rival Amazon.com's Kindle Fire. The new Nook tablet is expected to be available for purchase starting late next week, in time for holiday sales.

Meanwhile, Amgen jumped after the biotech firm said it would buy back up to $5 billion of its stock.

Dynegy plunged after a report that the firm is preparing to file for Chapter 11 bankruptcy protection.

—Follow JeeYeon Park on Twitter: twitter.com/JeeYeonParkCNBC

On Tap This Week:

TUESDAY: NFIB small biz optimism index, McDonald's October sales, 3-yr note auction, EU finance ministers meet; Earnings from Toyota, Activision Blizzard, Take Two Interactive
WEDNESDAY: Weekly mortgage apps, wholesale trade, oil inventories, 10-yr note auction, AT&T/Sprint back in court, Citigroup settlement hearing; Earnings from Anheuser Busch, GM, HSBC, Macy's, Ralph Lauren, Wendy's, Cisco, Green Mountain
THURSDAY: International trade, jobless claims, import & export prices, 30-yr bond auction, MF Global bankruptcy proceedings; Earnings from Kohl's, Disney, Nordstrom, Nvidia
FRIDAY: US Holiday—Veteran's Day. Markets open, banks closed. Consumer sentiment, French short sale ban ends

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