The Dow Jones Industrial Average ended Thursday higher by 143 points, or 1.3 percent. The broader S&P 500 Index rose 9 points, or 0.8 percent, while Nasdaq Composite Index fell 10.8 points, or 0.4 percent, weighed down by Internet stocks.
While the U.S. unemployment rate still hovers above 9 percent and is a huge obstacle to real economic recovery, the Labor Department said Thursday that last week’s initial applications for unemployment benefits were at a five-month low.
In addition, the government raised its estimate of U.S. economic growth modestly, for the April to June period.
The big break came from Europe, where Germany’s Bundestag parliament voted to approve additional powers for Europe’s bailout fund, a boon for Chancellor Angela Merkel, her political allies in Europe, and the embattled euro currency.
While additional, and huge, hurdles remain ahead; Germany’s approval was significant due to the fact that it is the eurozone’s largest and most healthy economy. And in recent weeks, analysts nervously pointed to what seemed to be growing rifts between Germany and its less-wealthy and debt-ridden neighbors.
The bailout fund, called the European Financial Stability Facility (EFSF), will be boosted from its current limit of 250 billion euros (US$338 billion) to 440 billion euros (US$600 billion). More than a third of the fund’s capital comes from Germany.
The news buoyed banking shares, with Citigroup Inc. rising 3.8 percent and Bank of America Corp. gaining 3 percent Thursday. The KBW Bank Index also rose Thursday.
However, technology stocks weighed on the Nasdaq, with chipmaker Advanced Micro Devices falling by almost 13 percent after the company cut its earnings forecast for the upcoming quarter. Movie delivery service Netflix Inc. fell by 9 percent, while Amazon.com Inc. shed 1.9 percent, after a big rally the previous session.
