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Market Recap: DJIA Trims Lead to 78 Points as S&P Subdues the Bulls

The ratings agency is reportedly threatening to downgrade several -- if not all -- euro-zone nations

by 12/5/2011 4:27:12 PM
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U.S. stocks catapulted higher at the opening bell, as investors cheered signs of progress on the euro-zone debt crisis. Most notably, German Chancellor Angela Merkel and French President Nicolas Sarkozy said they drafted a new, more budget-conscious treaty for the European Union (EU), ahead of the group's highly anticipated end-of-week summit. However, the major market indexes pared their gains in afternoon trading, as Wall Street digested a surprise drop in the Institute for Supply Management's (ISM) non-manufacturing index, as well as deflating reports in the Financial Times and Bloomberg. Specifically, the former media outlet said Standard & Poor's may downgrade the triple-A ratings of six European nations, while the latter financial outlet said the ratings agency is expected to place all 17 euro-zone nations on review for possible ratings cuts. Nevertheless, the bulls ultimately prevailed, with all three major market indexes holding on to healthy gains by the close.



The Dow Jones Industrial Average (DJIA 12,097.83) touched an intraday acme of 12,186.53, but whittled its lead down to 78.4 points, or 0.7%, by the bell. Among the Dow's 30 components, JPMorgan Chase (JPM) led the 24 advancing equities with a 3.7% gain, while Merck (MRK) paced the six decliners with a loss of 0.6%.

Likewise, the S&P 500 Index (SPX 1,257.08) topped out at 1,266.73 before losing its grip, but still tacked on 12.8 points, or 1%, when all was said and done. Finally, the Nasdaq Composite (COMP 2,655.76) fared the best of the three, advancing 28.8 points, or 1.1%. Earlier in the session, the tech-rich COMP jumped as high as the 2,674.53 level.

Turning to equities in focus, SAP AG (SAP) agreed to buy SuccessFactors (SFSF) for $40 per share ... Dollar General (DG) lifted its full-year earnings forecast ... Traders showed a rare affinity for calls ahead of earnings from AutoZone (AZO) ... Kraft Foods (KFT) tagged a new high after detailing spin-off plans ... Goldman Sachs downgraded its rating on Autodesk (ADSK)... and today's Quote of the Day comes from Alan Tipps, 52, of Portales, N.M. Over the past four years, the corporate jet pilot has been laid off three times, forcing him to burn through most of his 401(k). As such, he finds himself in the same boat as many baby boomers these days, stating:

"My retirement plan is the New Mexico state lottery."

But these weren't the only headlines hitting the Street today. Click on the links below for our blog coverage of:

And, in case you missed it, Senior Quantitative Analyst Rocky White took a retrospective look at 20 of the most profitable options straddles of the year. Click here to read his contribution to this week's Monday Morning Outlook.

For today's activity in crude oil, gold futures, options, and more, turn to page 2.

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