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Market Recap: Europe Sends Stocks Sky-High


Markets closed up today:

▲ Dow: +1.46 percent

▲ Nasdaq: +2.24 percent

▲ S&P: +1.91 percent

Precious metals:

▲ Gold: up +0.49 percent to $1,623.50 an ounce

▲ Silver: up +0.92 percent to settle at $27.73


▲ Oil: +0.60 percent

Markets closed up because:

Faced with Facebook, Starbucks and Angela Merkel, the market chose to focus on Merkel.

For a second day, the U.S. stock market powered higher after European leaders, including German chancellor Merkel, pledged to protect the union of 17 countries that use the euro. The Dow Jones industrial average blew past 13,000, a key psychological marker that it hadn't hit since early May.

It wasn't that there weren't any troubling signs about the economy. In fact, they abounded: U.S. economic growth was anemic in the second quarter. A measure of consumer sentiment fell in July as people worried about their job prospects. And Facebook and Starbucks dropped sharply after reporting disappointing quarterly results.

But on this day, investors homed in on a couple of remarks coming from Europe.

Most notably, Merkel and French president Francois Hollande released a joint statement saying they were "determined to do everything to protect the eurozone." That followed a similar pledge the day before from Mario Draghi, the president of the European Central Bank.

Merkel's statement was closely watched because Germany will have to sign on if any plan to keep the euro countries together is to succeed. As one of the stronger countries, Germany usually foots the bill for bailing out the weaker ones.

For all the rejoicing, a longstanding roadblock remains: Strong countries like Germany want other European nations to agree to cut spending. Weaker countries like Greece are resisting. The statement from Merkel and Hollande made clear that individual countries aren't off the hook, but "must comply with their obligations" - meaning a showdown over spending cuts is still possible.

Markets liked what they heard Friday. The Dow obliterated the 13,000 mark, climbing 187.73 points to 13,075.66. In two days, it's climbed 400 points.

The Standard & Poor's 500 jumped 25.95 to 1,385.97. The Nasdaq composite index rose 64.84 to 2,958.09.

In other positive signs, the euro rose against the dollar, stock indexes moved higher in Europe - including a 4 percent leap in Spain's benchmark index - and borrowing costs fell for Italy and Spain.

But there were plenty of red flags for anyone looking for them. The government reported that the U.S. economy grew at an annual rate of just 1.5 percent in the second quarter, a paltry number that likely isn't enough to bring down the unemployment rate. The government also said consumers pulled back on their spending. The Thomson Reuters/University of Michigan index of consumer sentiment fell in July as people worried about job prospects.

The Assocaited Press contributed to this report.

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