Stocks End Near Highs as Berlusconi to Resign

Stocks closed near session highs in thin, volatile trading Tuesday, boosted by news Italian Prime Minister Silvio Berlusconi will resign after the parliament passes economic reforms demanded by the EU.

“The market likes the announcement…But I’m not sure if this is going to change things at the end of the day,” said Doreen Mogavero, president and CEO of Mogavero Lee & Company. “[Berlusconi’s] resignation gives us a better chance at getting resolutions quicker, but it does not negate the fact that there are still difficulties in Italy.”

The Dow Jones Industrial Average rallied 101.79 points, or 0.84 percent, to close at 12,170.18, led by Wal-Mart and JPMorgan .

The S&P 500 advanced 14.80 points, or 1.17 percent, to end at 1,275.92. The Nasdaq added 32.24 points, or 1.20 percent, to finish at 2,727.49.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished below 28.

All 10 S&P sectors finished higher, led by banks and energy.

Berlusconi agreed to step down from his postafter parliament passes country's economic reforms demanded by the EU.

Stocks were volatile for most of the session after Berlusconi eked out a victory in Parliament on budget policy, but failed to obtain an absolute majorityin the Chamber of Deputies, fueling pressure on him to resign.

“The market has been anxious for Berlusconi to resign…now the question will be his replacement and the new government formation, but this was something that was quite apparent that the market wanted,” said Quincy Krosby, market strategist, Prudential Financial. “It’s interesting to see that market was poised for this all day—we had a flat trading session waiting for news and that the pressure was on him.”

Meanwhile in Greece, an emergency cabinet meeting was underway to agree on a new Prime Minister. Former ECB vice President Lucas Papademos is rumored to be the new interim government, according to a source at the ruling socialist party.

Hewlett-Packard finished flat after the tech giant is looking to sell Palm's webOS mobile software platform, a deal that could bring back hundreds of millions of dollars for the firm, according to sources.

Fellow Dow component McDonald's hit a new all-time high earlier after the fast-food giant posted a better-than-expected gain in October sales, thanks to its promotional Monopoly game in the U.S.

Credit Suisse will comply with a request from the Swiss government for account information after U.S. authorities requested Switzerland's help in catching Americans suspected of tax fraud.

On the earnings front, rallied after the online travel website said its profit jumped as the value of its bookings surged by more than 50 percent.

However, Toyota fell after the Japanese automaker retracted its annual profit guidance as floods in Thailand threatened outputjust as the company had recovered from supply shortages in the wake of the earthquake in Japan earlier this year.

Videogame publishers Activision Blizzard and Take Two are slated to post earnings after-the-bell tonight.

Amylin Pharmaceuticals slumped almost 10 percent after the firm announced it is ending its diabetes partnership with Eli Lilly .

Online review website Yelp has selected Goldman Sachs and Citigroup to lead an IPO, according to sources. The IPO is expected to value the company at up to $2 billion.

Treasury prices were steadyafter the government auctioned $32 billion in three-year notes at a high yield of 0.379 percent and a bid-to-cover of 3.41.

The government is also scheduled to auction $24 billion and $16 billion in 10-year notes and 30-year bonds on Wednesday and Thursday, respectively.

On the economic front, the National Federation of Independent Business said its Small Business Optimism Index gained for a second consecutive monthin October as outlook for business conditions improved.

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On Tap This Week:

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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