Stocks rallied across the board Thursday after some positive economic news, a draft document showing plans for a wide-ranging response to the euro zone debt crisis, in addition to a handful of positive earnings news.
The Dow Jones Industrial Average gained at the open led by Cisco and Disney , after ending lower in the previous session. The Dow is approximately 100 points away from the year's intraday high.
Meanwhile, Intel was the only decliner on the blue-chip index.
The S&P 500 and the tech-heavy Nasdaq also opened higher. The CBOE Volatility Index, widely considered the best gauge of fear in the market, tumbled below 18.
All 10 key S&P sectors were higher, led by financials and energy.
Europe is willing to let Greece default under a crisis response that would involve a bond buyback, a debt swap but no new tax on banks, EU sources said as euro zone leaders began a crucial emergency summit.
The euro zone bailout fund, the EFSF, will provide loans to Greece, Ireland and Portugal at a lower interest rate and for longer maturities, according to draft document.
Loans from the European Financial Stability Facility will be extended from 7.5 years to at least 15 years and the interest rate will be lowered from around 4.5 percent currently, in the case of reece and Portugal, to around 3.5 percent, the draft document said.
The euro rose to a two-week high against the U.S. dollaras optimism surrounding a euro zone debt deal prompted short covering.
European banks including Barclays , Deutsche Bank and Banco Santander rallied sharply following the news.
“I'm negative on Europe—You have countries that have the biggest problems being subject to shrink monetary policy at a time they need more growth, so it’s a recipe for disaster,” according to Richard Campagna, managing director of 300 North Capital. “The ECB at some point has to do what the Fed did and add more liquidity, but they’re not doing that until there’s a bigger crisis.”
“What’s more likely is that you get another periodic blowups, or mini crises, every few months,” he added. “And this time, it’s going to center on Italy and Spain.”
Campagna said the market is going through a "mid-cycle slowdown."
"In the environment where the economy is slowing globally and where you have unresolved issues in U.S. and Europe, it’s only a matter of time before we see another one of these fear-induced crises that will take the markets back down," he said. "We’ve been in a trading range—1,250 to 1,350 [on the S&P]. We may rally to a new high, but at the same time, we could see that 1,250-level again sometime this fall."