Schaeffer's Trading Floor Blog

Market Update: DJIA Adds Triple Digits as Wall Street Applauds Merkel-Sarkozy Proposal

The DJIA, SPX, and COMP are higher at midday, as Wall Street applauds an EU proposal from German Chancellor Merkel and French President Sarkozy

by 12/5/2011 12:46 PM
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The major market indexes are higher at midday, as Wall Street waxes optimistic on the European debt situation. In a joint news conference, German Chancellor Angela Merkel and French President Nicolas Sarkozy called for their fellow leaders to consider a new, fiscally firmer treaty for the European Union (EU), which is set to convene at the end of the week. The proposal -- which includes a budget-balancing rule -- would need the approval of all 27 EU representatives. The high hopes for Europe have helped to overshadow some lackluster economic data on the home front, after the Institute for Supply Management's (ISM) non-manufacturing index slowed to 52 in November from 52.9 in October -- falling short of economists' expectations for an improvement to 54, and marking the index's lowest level since January 2010. Nevertheless, the Dow Jones Industrial Average (DJIA) is kicking off the week with a triple-digit lead, while the S&P 500 Index (SPX) is challenging key technical resistance.

DJIA price chartSpecifically, the Dow Jones Industrial Average (DJIA - 12,164.77) is up 145.4 points, or 1.2%, to wink at the 12,165 level. Meanwhile, the S&P 500 Index (SPX - 1,264.49) has tacked on 20.1 points, or 1.6%, while the Nasdaq Composite (COMP - 2,670.01) has added about 43 points, or 1.6%.

Checking in on Dow components, financial concerns Bank of America (BAC) and JPMorgan Chase (JPM) are leading the bullish majority with gains of 4.3% and 4.6%, respectively. On the flip side, McDonald's (MCD) has pulled back from record highs to pace the five decliners, giving back 0.2%.

Elsewhere, the CBOE Market Volatility Index (VIX - 27.01) has extended its retreat beneath the 30 level. At last check, the market's "fear gauge" has surrendered 0.5 point, or 1.9%, to hover just north of 27.

Among equities in focus, SAP AG (SAP - 59.14) agreed to buy SuccessFactors (SFSF) for $3.4 billion, while Dollar General (DG - 40.50) tagged a record high after upping its full-year earnings forecast. Elsewhere, hopes are high ahead of earnings from AutoZone (AZO), buyout buzz is fueling call activity on Collective Brands (PSS), and Nike (NKE - 96.90) is shrugging off a pre-market downgrade.


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