Stocks are surging higher today as European leaders said they would announce a comprehensive plan to shore up capital defenses for the current financial crisis by the start of November. German Chancellor Angela Merkel and French President Nicolas Sarkozy addressed the market, saying the plan would include recapitalizing Europe’s banks. The announcement provided much-needed relief for investors as uncertainty caused by the sovereign debt crisis has been the primary culprit in the market’s excessive volatility in the past several months. According to Bloomberg, short-selling in the market has risen the most since at least 2006. Borrowed shares climbed 11.6 percent last month from 9.5 percent in July, with Chinese stocks getting the most attention from bears. Among the most shorted blue chips were Alcoa (AA), Pfizer (PFE) and General Electric (GE). Bulls are arguing that stocks are oversold and valuations are already too low, but bearish investors and short sellers suggest that fundamentals indicate that the market has more room to fall. The same argument may also be applied to Netflix (NFLX), the movie rental service provider has seen its share price nearly cut in half over the past two months after a string of strategic mishaps. The company now says that it is abandoning its plan to spin off its rent-by-mail service into a new company called Qwikster. Netflix shares fell over 1 percent on the news. On the other end of the spectrum, shares of Apple (AAPL) are up over 4 percent as the company said its new iPhone 4S broke a pre-order record despite being only a slightly improved version of the previous model. Commodities are moving up alongside the overall market as well with oil prices surging over 3 percent and gold jumping up 2 percent.
Major U.S. Stock Indices
DJIA: 11,377.55 (+2.47 percent)
S&P 500: 1,189.28 (+2.93 percent)
NASDAQ: 2,555.43 (+3.07 percent)
Russell 2000: 679.35 (+3.53 percent)
In other news:
- Steve Jobs was undoubtedly one of the greatest CEOs in history, but here are a few that are just as good. The list includes Jeff Bezos of Amazon (AMZN) and Alan Mulally of Ford (F). [Marketwatch]
- A new change in the Volcker Rule could cut revenue for fixed-income market makers by as much as 25 percent. [Bloomberg]
- Detroit, Michigan has been the poster child of the U.S. recession over the past several years, but the city is making quite an impressive resurgence. [The Street]
- The U.S. has 14 million people that are unemployed and 3.2 million unfilled jobs. Companies like Siemens (SI) and Cummins (CMI) have thousands of open positions but can’t find workers with the right skills to fill them. [CNBC]
- Thomas J. Sargent and Christopher A. Sims of the U.S. have been awarded the 2011 Nobel Prize in Economics. At least one American has been awarded the honor since 2000.
Check back for more news.