Dow Logs 4th Weekly Gain, Positive for 2011

Stocks ended near session highs Friday following news that a group of euro zone finance ministers have approved the next round of aid for Greece and amid optimism over the euro zone ahead of the EU summit on Sunday.

The Dow Jones Industrial Average jumped 267.01 points, or 2.31 percent, to finish at 11,808.79, finishing firmly in positive territory for the year.

The S&P 500 rallied 22.86 points, or 1.88 percent, to end at 1,238.25. The Nasdaq gained 38.84 points, or 1.49 percent, to close at 2,637.46. The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished below 32.

For the week, the Dow rose 1.41 percent, the S&P climbed 1.12 percent, while the Nasdaq declined 1.14 percent. Among the Dow components, Travelers was the biggest gainer, while IBM slumped.

Among the key S&P sectors, financials logged the biggest gain, while techs slipped.

European shares closed higher amid optimism that policymakers would make progress on a solution to the euro zone debt crisis in the coming days.

France and Germany said in a joint statement that European leaders would discuss a global solution to the crisis on Sunday, but no decisions would be adopted before a second meeting by Wednesday at the latest.

“[The result from the EU summit] is not going to cure all the ills, but it’s a step toward the right direction…otherwise the market certainly will respond in an extremely negative way,” said Peter Cardillo, chief market economist at Rockwell Global.

Cardillo explained that Sunday’s summit will set the tone for markets until the second meeting on Wednesday when a final decision is expected to be made.

“If we do get some sort of resolution, the market is headed much higher right into the first quarter because the market fundamentals are improving…I’m very bullish at this juncture. This is just the beginning of a new bull run,” he said. “Right now, we’re nearing some resistance levels on the S&P at 1,235-1,250 and we could pass those levels as early as next week.”

However, should talks continue to stall and no agreements are made, Cardillo said the markets would face “grave consequences,” and added that this may be a top.

Fueling the day's rally, a group of finance ministers agreed to the payment of the next round of 8 billion under Greece's bailout program and is waiting for the IMF to approve.

Meanwhile, President Obama announced that all American forces will be withdrawn from Iraq by year-end, but traders said the statement was largely uneventful for the markets.

"Everyone's still focusing on the euro zone," said Joe Saluzzi, co-manager of trading at Themis Trading.

On the earnings front, McDonald's jumped after the fast-food chain posted higher-than-expected profit.

Fellow Dow component General Electric reported earnings that were in line with analyst forecasts, while revenue beat Wall Street expectations. The conglomerate also said it expects to increase operating earnings per share at a double-digit percentage rate in 2012.

Honeywell International rose after the conglomerate posted a 45 percent earnings increase amid strength in its commercial aerospace unit. The firm also boosted its full-year outlook.

Meanwhile, Verizon edged higher after the wireless carrier said quarterly revenue rose faster than estimates, but subscriber growth was slower than expected.

Microsoft gained slightly after the tech giant posted earnings Thursday that met expectations and revenue that topped modest Wall Street forecasts, thanks to strong sales of its Office applications package.

Another slew of earnings are expected next week including Dow components Caterpillar, 3M, DuPont, Boeing, ExxonMobil, P&G,Chevron and Merck.


Ford rallied after Standard & Poor's raised its rating on the automaker by two notches.

Seagate Technology surged more than 20 percent after Needham & Co. said the firm is better-positioned to emerge from widespread flooding in Thailand than its rival Western Digital . The brokerage also reiterated its "strong buy" rating on Seagate.

And Eastman Kodak jumped after a report that said the camera company is in talks with Cerberus & Silverpoint for up to $900 million in rescue financing.

Meanwhile, Groupon is planning on raising a much as $540 million in an initial public offering, less than previously expected. The daily deals website is planning to launch its IPO on Nov. 4 on the Nasdaq.

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Coming Up Next Week:

MONDAY: Chicago Fed national activity index, AT&T/T-Mobile status hearing; Earnings from Caterpillar, Amgen, Netflix and Texas Instruments
TUESDAY: S&P/Case-Shiller home price index, consumer confidence, FHFA house price index, 2-yr note auction, USDA food prices outlook; Earnings from BP, Deutsche Bank, DuPont, 3M, UBS, UPS, and Broadcom
WEDNESDAY: Weekly mortgage applications, durable goods orders, new home sales, oil inventories, 5-yr note auction; Earnings from Boeing, Ford, ConocoPhillips, GlaxoSmithKline, Sprint and Visa
THURSDAY: GDP, jobless claims, pending home sales index, 7-yr note auction, Motorola begins pre-orders for Droid Razr on Verizon; Earnings from AstraZeneca, Bristol-Myers, ExxonMobil, P&G, Royal Dutch Shell, Aetna, Motorola Solutions, Time Warner Cable, AMD, Motorola Mobility, Gilead Sciences, Baidu and Electronic Arts
FRIDAY: Personal income & outlays, employment cost index, consumer sentiment; Earnings from Chevron and Merck

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