US markets surges on good GDP data and Europe's debt accord

28 Oct 2011 Evaluate

The US markets surged on Thursday, to near three-month highs, lifting the S&P 500 back into positive turf for 2011 and with banks in particular rallying in relief over Europe’s debt accord. Also quarterly data illustrating the largest jump for the US economy in more than a year added to the bulls’ rampage. European leaders agreed to restructure Greek bonds and banks were asked to raise capital and meet higher reserve requirements. Investors in Greek debt accepted a voluntary write-down of 50% and European leaders widened a rescue fund to $1.4 trillion.

In US, the GDP report came as strongest evidence yet that the country isn’t in a recession. US economy in the third quarter expanded at 2.5%, faster than the 1.3% growth in the second quarter. Another report from the Labor Department stated that, initial jobless claims in the week ended October 22 decreased by 2,000 to a seasonally adjusted 402,000. Besides, more than half of the companies in the S&P 500 have released quarterly results since October 11, and about three- quarters have beaten the average analyst estimate.

The Dow Jones industrial average gained 339.51 points, or 2.86 percent, to 12,208.50. The Standard and Poor’s 500 closed higher by 42.59 points, or 3.43 percent, to 1,284.59, while the Nasdaq composite gained 87.96 points, or 3.32 percent, to 2,738.63.

The Indian ADRs closed in green on Thursday, Infosys Technologies was up by 3.22%, ICICI Bank was up by 3.22%, HDFC Bank was up by 2.02%, Tata Motors was up by 1.10% and Dr. Reddy’s Lab was up by 1.08%.