Stocks up after European rescue fund ruling
Stocks rose Wednesday after a German court cleared the way for that country to participate in a European rescue fund. The ruling helped push Germany's main stock index, the DAX, to its highest level since July of last year.
Head of German Federal Constitutional Court Andreas Vosskuhle is seen on a television screen at the stock market in Frankfurt, Germany, Wednesday. Germany's high court rejected calls to block the Europe’s permanent rescue fund, paving the way in a much-anticipated ruling for its ratification by the country's president.
Michael Probst/AP
New York
The U.S. stock market ended higher Wednesday after a German court cleared the way for that country to participate in a European rescue fund. Attention shifted to the Federal Reserve, which began a big two-day meeting.
The Dow Jones industrial average climbed 9.99 points to close at 13,333.35, a four-year closing high. The Standard & Poor's 500 index added an even 3 points to 1,436.56, also close to a four-year high.
Germany's highest court ruled that the country could contribute to Europe's $640 billion rescue fund to help indebted governments. The ruling offered investors relief, but not much more.
The issue was "more speed bump than hurdle," Dan Greenhaus, chief global strategist at the brokerage BTIG, told clients. "More legislative and political challenges lay ahead. Today's ruling simply does nothing to change that larger story."
The ruling helped push Germany's main stock index, the DAX, to its highest level since July of last year. The euro rose to a four-month high against the dollar.
When the U.S. central bank wraps up its meeting Thursday, investors and economists expect it to announce new steps to stimulate economic growth, especially after a Labor Department report last week showed employers added fewer than 100,000 jobs last month.
Many investors expect that the Fed will commit to buying more bonds and extend its pledge to keep short-term interest rates near zero until 2015. The Fed previously offered to keep them there until late 2014.
Jack Ablin, chief investment officer at Harris Private Bank in Chicago, was skeptical that the Fed would begin another bond-buying program. The Fed hatched two previous efforts when economic figures looked bleaker than today. The first came in March 2009, right after the financial crisis. Both programs ignited stock rallies.
The economy has plenty of problems now, "but there are some great things happening, too," Ablin said.
In other trading Wednesday, the tech-heavy Nasdaq composite index climbed 9.78 points to 3,114.31. Apple's stock added $9.20 to $669.79 following the unveiling of its latest, slimmer iPhone.
Facebook's stock jumped 8 percent after CEO Mark Zuckerberg held his first interview on Tuesday and said the social networking company would work on generating profit from users who use the social network on their phones. The stock gained $1.50 to $20.93.
The Dow and the S&P 500, the benchmark for most stock funds, have already surged about 2 percent in September, usually a grim month for the stock market.
The indexes reached four-year highs last Thursday when news out of Europe set off a worldwide rally. The European Central Bank laid out a concrete plan to support the region's struggling countries through buying their government bonds.
The Dow remains at its highest level since December 2007, the beginning of the Great Recession. It's 6 percent shy of the all-time high it hit two months earlier, in October 2007.