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Positive News From Portugal Leads To Early Strength For Stocks
Stocks showed a notable move to the upside at the start of trading on Wednesday, as traders reacted to news of strong demand for a Portuguese bond auction. The major averages all moved higher at the open, although buying interest has waned since then.
The initial strength came after the Portuguese government sold 1.25 billion euros, or approximately $1.6 billion, in notes scheduled to mature between 2014 and 2020, relieving some short-term concerns about the country’s ability to pay its mounting debt.
Spain, another source of financial concern in Europe, will make a bond offering tomorrow. The results of this week’s bond auction may show that investors are willing to take a risk on sovereign debt, but only at a high rate of return.
Back in the U.S., the day’s economic data has had little impact on sentiment in light of the news out of the euro zone.
With the price of fuel imports to the U.S. showing another substantial increase in the month of December, the Labor Department released a report showing another notable increase in total import prices. The report also showed a moderate increase in total export prices.
In corporate news, insurer American International Group, Inc. (AIG) said it has reached a deal to sell its 97.57 percent interest in its Taiwan life insurance unit Nan Shan Life Insurance Company Ltd. to Taiwan’s Ruen Chen Investment Holding Co. Ltd. for $2.16 billion in cash.
Chevron Corp. (CVX) said after the close on Tuesday that it expects its fourth-quarter earnings to be higher compared to the previous quarter.
Engineering and manufacturing company ITT Corp. (ITT) also announced that its board has approved a plan to split the company’s businesses into three distinct, publicly-traded companies. The company intends to execute the plan before the end of 2011, with each company expected to be listed on the NYSE.
Banking stocks have shown a strong upward move amid easing concerns about European financial stability, resulting in a 1.5 percent gain by the KBW Bank Index. Defense and energy stocks are also seeing early strength, while most of the other major sectors are showing more modest moves.
The major averages have pulled back off their highs for the young session but currently remain in positive territory. The Dow is up 54.87 points or 0.5 percent at 11,726.75, the Nasdaq is up 8.11 points or 0.3 percent at 2,724.94 and the S&P 500 is up 6.36 points or 0.5 percent at 1,280.84.
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