Market Recap: Stocks Rally as Investors Turn Their Eyes Toward Italy

Markets closed up on Wall Street today:

• Dow +0.71 percent
• S&P +0.63 percent
• Nasdaq +0.34 percent
• Oil +1.85 percent
• Gold +2.37 percent.

On the commodities front:

• Oil (NYSE:USO) climbed to $96.00 a barrel
• Gold (NYSE:GLD) climbed to $1,797.70 an ounce
• Silver (NYSE:SLV) climbed 2.60 percent to settle at $35.31.

(Related: The Euro Mess Brings Out the Best in Gold)

Today’s markets were up because:

1) Greece: Greek Prime Minister George Papandreou and opposition leader Antonis Samaras agreed late Sunday to create a transitional administration to oversee the country’s debt deal with the European Union and then hold early elections.

Though the agreement will see Papandreou resign and his government overturned, it looks as if the Greece issue may finally be nearing resolution, as investors now turn their eyes toward Italy.

2) Italy: With Greece now seemingly on the right track, investors are keenly watching developments in Italy, where Prime Minister Silvio Berlusconi is struggling to prove he can implement austerity measures pledged to European Union allies amid reports that the he will likely resign very soon.

Though Berlusconi has denied such reports, he faces a vote of confidence Tuesday and many are betting he is headed out the door as his coalition’s majority continues to deteriorate, with numerous members of his party defecting to the opposition over the last week. Italy must push through 45.5 billion euros in austerity measures, approved by Berlusconi’s government in August, in order to secure European Central Bank purchases of Italian debt. Yields on Italian 10-year bonds soared above 6.65 percent, nearing the 7 percent level that drove Greece, Ireland, and Portugal to seek bailouts.

3) Banks: Embattled investment bank Jefferies (NYSE:JEF) managed to stay in positive territory today after disclosing that it had sold a large amount of its European sovereign debt. Shares dropped roughly 18 percent last week on fears that it could be the next MF Global (NYSE:MF).

Despite news that the financial industry lost roughly 650,000 customers and $4.5 billion in deposits to credit unions because of Bank Transfer Day — a movement that urged bank customers to close their accounts and instead deposit funds in credit unions on or before November 5 — some of the biggest U.S. banks moved upward today, outperforming the major indices. Though Bank of America (NYSE:BAC) declined, Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), JPMorgan (NYSE:JPM), and Citigroup (NYSE:C) all tacked on respectable gains.

[Editor’s note: the above is a cross post that originally appeared on Wall St. Cheat Sheet.]