NEW YORK — Stock indexes closed at the highest point since the U.S. debt limit showdown in August on Monday. The market was driven higher by a round of corporate takeovers and reports that Europe’s bailout fund will be larger than originally thought. The Nasdaq composite turned positive for the year.
Netflix Inc. shares dropped in after-hours trading after the DVD-by-mail and video streaming company forecast a sharp drop in fourth-quarter profits.
Investors are still waiting for a resolution to Europe’s debt problems. European leaders said they made progress at a weekend summit and plan to unveil concreteplans for containing the crisis by Wednesday.
The Dow was up about 40 points in the first hour of trading but moved steadily higher through midday after reports that Europe’s takeover fund will be expanded. It finished with a gain of 104.83 points, or 0.9 percent, at 11,913.62.
“The market is expecting that there will be some kind of deal worked out Wednesday,” when European financial ministers are scheduled to meet, said Uri Landesman, president of Platinum Partners. “If there’s not a deal by then, the market is going down significantly.”
Even with concerns about Europe, U.S. companies are still reporting bigger profits.The maker of construction equipment reported a44 percent surge in income, more than Wall Street analysts were expecting, thanks to strong growth in exports. The company said it expected the global economy to continue recovering, albeit slowly.
Caterpillar jumped 5 percent, the most of the 30 companies in the Dow.
The Standard & Poor’s 500 index rose to 1,254.19. That is just 3.45 points, or 0.3 percent, below where it started the year. It’s the highest close for the S&P 500 since Aug. 3, just as Washington was resolving a showdown over raising the country’s borrowing limit. If the S&P 500 finishes the year with a gain, it will be its biggest turnaround since 1984.
The Nasdaq composite rose 61.98, or 2.3 percent, to2,699.44. The gains turned the Nasdaq positive for the year. The S&P 500 is the only major market index that remains lower than where it started the year.
The Russell 2000 index of small companies rose 3.3 percent as investors moved money into higher-risk assets.
A series of corporate deals helped lift the market, said Phil Orlando, chief equity strategist at Federated Investors. “This is telling us that companies think stocks are cheap, and they’re willing to spend some of the cash that’s sitting around on their balance sheets,” he said.
Five shares rose for every one that fell on the New York Stock Exchange. Consolidated volume came to an average 4.2 billion shares.
Business, Pages 22 on 10/25/2011