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Friday, October 28, 2011

US Stocks soar 3% on Europe deal (ext)

NEW YORK (CNNMoney) -- Europe finally has a deal, and investors are pleased ... for now.

U.S. stocks rallied right out of the gate Thursday, with the major indexes jumping about 3%, after European Union leaders agreed to expand Europe's bailout fund and take major losses on Greek bonds.

The Dow Jones industrial average (INDU) shot up 340 points, or 2.9%. The S&P 500 (SPX) gained 43 points, or 3.4%, and the Nasdaq composite (COMP) surged 88 points, or 3.3%.

The day's rally pushed the S&P 500 into positive territory for the year for the first time since Aug. 4. The broad index is now on track for its best monthly performance since October 1974.

The gains also pushed the Dow above the 12,000 mark for the first time since Aug. 1. The blue-chip index is headed for its best month since January 1987.

The tech-heavy Nasdaq is on track for its biggest monthly gains since October 2002.

Stocks have been rallying on the promise of deal to tackle Europe's debt saga since the start of October. That long-awaited promise was delivered, with a eurozone debt agreement announced early Thursday, following marathon talks aimed at finding solutions for Europe's debt and banking crisis.

"The deal is certainly good news, and a major step that will help avoid a replay of 2008 in the banking system," said Bob Andres, chief investment officer and strategist at Merion Wealth Partners.

Though investors are relieved, details about the deal remain dicey, said Andres, and the plan doesn't go far enough to tackle the structural problems that are hindering economic growth in the region.

"We can't forget the Europe is basically in a recession, and that this plan will do absolutely nothing to address economic growth, or any kind of problem that might pop its head up in Italy or other eurozone countries," he said.

The U.S. government reported that third-quarter gross domestic product -- the broadest measure of a country's economic activity -- increased at an annual rate of 2.5%. The pace of growth was in line with expectations, and was nearly double the 1.3% growth rate in the second quarter.

The dollar fell against the euro, the Japanese yen and the British pound.

Oil for December delivery gained $3.76 to settle at $93.96 a barrel.

Gold futures for December edged up $24.20 $1,747.70 an ounce.

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