November 28, 2011 in Business, Nation/World

Stocks soar after big holiday shopping weekend

Associated Press
 
Sales of new homes up
Americans bought slightly more new homes in October, a hopeful sign for the troubled housing market. But the median sales price fell to its lowest level of the year, and the overall sales pace is trailing last year’s — the worst in half a century.


The report suggests housing continues to drag on the U.S. economy and is a long way from recovering. New-home sales increased 1.3 percent last month to a seasonally adjusted annual rate of 307,000, the Commerce Department said today. That’s less than half the 700,000 that economists say must be sold to sustain a healthy housing market.

September’s figures were also revised down significantly to show a weaker pace than first estimated.

NEW YORK — Hopes for a more far-reaching solution to Europe’s debt crisis and a strong start to the U.S. shopping season sent stocks sharply higher today.

Initial reports show a record number of shoppers hit the mall or bought gifts online during the holiday weekend. Thanksgiving weekend is a make-or-break time for many retailers. For the past six years, Black Friday has been the biggest sales day of the year.

Markets in Europe are also up sharply as leaders there discuss new approaches for containing the region’s debt troubles, including a joint bond issue. Investors are hoping that the recent signs of deterioration in the debt crisis will finally get Europe’s leaders to agree on a package of measures that can ease market concerns over whether the euro currency itself can survive.

Stock indexes in Italy, Germany and France rose more than 4 percent. The euro and commodities prices also rose. The yield on the 10-year Treasury note rose to 2.04 percent from 1.97 percent late Friday as investors sold ultrasafe assets.

Banks had some of the biggest gains as investors became less fearful of an imminent freeze-up in Europe’s financial system. Morgan Stanley jumped 7 percent and JPMorgan Chase & Co. rose 5 percent. Retailers also rose sharply. Macy’s Inc. rose 6 percent and Best Buy Co. rose 4.2 percent.

The Dow Jones industrial average jumped 303 points, or 2.7 percent, to 11,535 in the first 45 minutes of trading. The index plunged 564 points last week on fear that Europe’s debt crisis was spreading to large countries like Spain. Alcoa Inc. jumped 5.7 percent, the most of the 30 stocks in the Dow.

The Standard & Poor’s 500 rose 35, or 3.1 percent, to 1,194. The Nasdaq composite rose 81, or 3.3 percent, to 2,523.

A record 226 million shoppers visited stores and websites during the four-day holiday weekend starting on Thanksgiving Day, up from 212 million last year, according to early estimates by The National Retail Federation released on Sunday. They spent more, too: The average holiday shopper spent $398.62 over the weekend, up from $365.34 a year ago.

It’s still unclear whether retailers’ will be able to hold shoppers’ attention throughout the remainder of the season, which can account for 25 to 40 percent of a merchant’s annual revenue.

Questions also remain about the situation in Europe.

Credit rating agency Moody’s warned today that the “rapid escalation” of Europe’s financial crisis is threatening the creditworthiness of all euro zone governments, even the most highly rated. Only six of the euro zone’s 17 countries have the top rating — Germany, France, Austria, the Netherlands, Luxembourg and Finland.

Also, the Organization for Economic Cooperation and Development said policy makers around the world must “be prepared to face the worst,” as the economic impact of Europe’s debt crisis threatens to spread around the developed world.

The crisis in Europe will likely be the focus as President Barack Obama hosts European leaders for a summit today.

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