Stocks rally on Europe's new deal

@CNNMoneyInvest December 9, 2011: 4:25 PM ET
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NEW YORK (CNNMoney) -- U.S. stocks rallied Friday after a majority of European leaders agreed on a new deal to try to resolve the eurozone debt crisis.

The Dow Jones industrial average (INDU) added 187 points, or 1.6%. The S&P 500 (SPX) jumped 21 points, or 1.7%. The Nasdaq (COMP) rose 50 points, or 1.9%.

During a meeting in Brussels, Belgium, early Friday, the 17 members of the eurozone -- which share the embattled single currency -- reached a deal for a new intergovernmental treaty to deepen the integration of national budgets.

Six additional EU nations supported the deal, but Britain rejected it. The three remaining EU countries tentatively support the deal, but have yet to secure parliamentary approval. Leaders are aiming to have the plan ready by March.

European and U.S. stocks rallied on the news, ignoring Moody's downgrade of three top French banks: BNP Paribas, Credit Agricole SA and Société Générale.

The U.S. financial sector outperformed the broader market in early trading with Bank of America (BAC, Fortune 500), Goldman Sachs (GS, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Morgan Stanley (MS, Fortune 500) and Wells Fargo (WFC, Fortune 500) up between 1.5% and 4%. The rally in financials helped erase some of the industry's outsize losses from Thursday.

"The market views Europe's deal as a positive step, so the optimistic juices are flowing," said Peter Tuz, president at Chase Investment Counsel. "The hope is that Europe is moving toward a mechanism that will allow for broader European Central Bank involvement, and other tools to solve the financial crisis."

European summit: Now it's up to the ECB

But, Tuz warned, "the devil will be in the details, and it will take time to implement."

Meanwhile, a Reuters report that China is creating a $300 billion fund to invest in both Europe and the United States could also have lent support to stocks, said Jennifer Lee, an economist with BMO Capital Markets.

U.S. stocks came off losses on Thursday. The stock sell-off accelerated in the last 20 minutes of trading, with all three indexes falling to their lows of the day, after a flurry of headlines put the likelihood of a Europe debt crisis solution into question.

The declines were sparked in part by ECB President Mario Draghi's refusal to commit to offering broad assistance to troubled eurozone countries. Draghi also emphasized "substantial downside risks" for the European economy.

Like it or not, the euro is doomed

Treasury Secretary Tim Geithner was in Europe this week to meet with top government officials, highlighting the growing concern in Washington about the eurozone debt crisis.

Following the ups and downs, stocks end little changed for the week. The Dow rose 1.4%, while the S&P 500 added 0.9% higher and the Nasdaq edged up 0.8%.

World markets: European stocks ended with solid gains. Britain's FTSE 100 (UKX) ticked up 0.8%, the DAX (DAX) in Germany rose 1.9% and France's CAC 40 (CAC40) added 2.3%.

China's inflation rate: Lowest since September 2010

Asian markets ended lower, after mixed reports on China's economy showed that inflation cooled in November while industrial production slowed sharply. The Shanghai Composite (SHCOMP) fell 0.6%, the Hang Seng (HSI) in Hong Kong slumped 2.7% and Japan's Nikkei (N225) lost 1.5%.

Economy: The government released its latest trade data for October, showing the U.S. trade deficit dipped slightly to $43.5 billion. The number was in line with estimates, but deeper in the red from the $43.1 billion deficit in the prior month.

The December installment of the University of Michigan's Consumer Sentiment Index beat expectations, rising to 67.7 from 64.1 in November. Analysts were expecting a rise to 65.1.

Companies: DuPont (DD, Fortune 500) shares plunged after the chemical maker lowered its forecasts for the year. DuPont CEO Ellen Kullman cited slower growth and global economic uncertainty as reasons for the lower outlook.

General Electric (GE, Fortune 500) shares rose after the company said it is raising its quarterly dividend by 13%. It was the fourth time GE has increased its dividend since July 2010.

Currencies and commodities: The dollar fell against the euro, the British pound and the Japanese yen.

Oil for January delivery rose $1.07 to settle at $99.41 a barrel.

Gold for February delivery gained $3.40 to settle at $1,716.80 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 2.05% from 1.97% late Thursday.  To top of page

Index Last Change % Change
Dow 16,805.41 127.51 0.76%
Nasdaq 4,483.72 30.92 0.69%
S&P 500 1,964.58 13.76 0.71%
Treasuries 2.27 -0.00 -0.09%
Data as of 4:48pm ET
Company Price Change % Change
Ford Motor Co 13.78 -0.62 -4.31%
Microsoft Corp 46.13 1.11 2.47%
Apple Inc 105.22 0.39 0.37%
Bank of America Corp... 16.72 0.12 0.72%
Yahoo! Inc 43.50 0.90 2.11%
Data as of Oct 24
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.98%3.95%
15 yr fixed3.05%3.05%
5/1 ARM3.32%3.71%
30 yr refi4.05%4.03%
15 yr refi3.12%3.11%
Rate data provided
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