Forexpros – U.S. stocks traded solidly higher Wednesday, as easing euro zone worries combined with the Fed’s Beige Book indicating economic expansion, worked to increase risk appetite for equities.
At the close of U.S. trade, the Dow Jones Industrial Average added 0.70%, the S&P 500 gained 0.74%, while the Nasdaq Composite advanced 0.84%.
The risk on trade was sparked as the yield on Spanish 10-year bonds pulled away from four-month highs, but investors remained cautious amid concerns about the government’s ability to cut its deficit.
Prime Mister Mariano Rajoy stated his country will not require a bailout and that the country’s deficit target remains “unconditional.”
Rajoy said that the government will push forward the program to tackle tax and employment fraud this month, as well as reforms in the banking and healthcare systems.
In addition, easing Spanish worries, ECB Executive Board member Benoit Coeure stated “Will the ECB intervene? We have an instrument , the securities markets program, which hasn’t been used recently but it still exists.” Signaling the ECB may become involved to assist the struggling nation.
Meanwhile, in the U.S. the Fed’s Beige Book report revealed that the economy maintained expansion in all 12 of it regions with manufacturing, hiring and retail sales showing signs of strength despite higher fuel costs.
Adding to the bullish fervor, Alcoa reported surprisingly positive first quarter profits helping to confirm the U.S. economic growth.
Homebuilders also participated in the rally with Pulte Group soaring 7.4% and Toll Brothers adding 3.5% as a Wells Fargo survey revealed 63% of sales managers reported better than expected home orders.
In bearish news, Computer Science Corp gave back 3.8% after drastically missing earnings estimates.
At the close European trade, the EURO STOXX 50 gained 0.85%, France’s CAC 40 climbed 0.62%, while Germany’s DAX soared 1.03%. Meanwhile, in the U.K. the FTSE 100 added 0.70%.
On Thursday, Traders are anticipating U.S jobless claims, the trade balance, as well as Core PPI. The French CPI and European Central Bank’s monthly report are also on tap.
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