Bank of America Merrill Lynch traders work on the floor of the New York Stock Exchange, Tuesday, Aug. 23, 2011, in New York.Henny Ray Abrams
North American stocks are building on their early strength in midday trading, as bullish U.S. economic news, a Greek bank merger and post-Hurricane-Irene relief have given investors' spirits a lift to start the week.
Shortly after noon ET, the S&P/TSX composite index was up 146 points at 12,474. In New York, the S&P 500 was up 24 points at 1,201, moving above 1,200 for the first time in nearly two weeks. The Dow Jones industrial average was up 191 points at 11,476, and the Nasdaq composite index had gained 63 points to 2,543.
Trading volume is well below normal in New York, as work in the U.S. financial centre slowly returns to normal following Hurricane Irene, which shut down subway lines and knocked out power in parts of the city. London was also closed for business for a national holiday, contributing to generally thin trading in global financial markets.
July's U.S. personal spending data, released before the opening bell, came in considerably stronger than expected, with a 0.8-per-cent rise, the biggest monthly gain in nearly two years. Economists said the numbers suggest that overall U.S. economic growth for the third quarter could be much stronger than previously feared.
U.S. insurance stocks surged in light of the much-less-than-feared damage delivered by Irene, which was downgraded to a tropical storm Sunday after hitting the U.S. eastern seaboard over the weekend. Travelers Cos. jumped 5.3 per cent, leading the gainers on the Dow Jones industrial average.
While Irene's relatively benign passing removed one risk weighing on the markets, news of a merger agreement between two major Greek banks further eased investors' risk aversion, as the proposed deal was seen as an important step toward finally stabilizing Greece's wobbly financial sector. The VIX index, the U.S. stock market's benchmark measure for risk, was down more than 7 per cent to 33.08.
The Greek news was a boon to European markets, which have been weighed down by fears of sovereign and bank defaults for months. Germany's DAX rose 2.4 per cent and France's CAC 40 index gained 2.2 per cent.
In Toronto, all 10 industry sub-indexes were trading higher, led by energy, up 2.1 per cent. The sector is getting a lift from higher oil prices, as crude has risen $2.00 (U.S.) to $87.37 a barrel in New York.
The materials sector is up 0.8 per cen, despite a modest pullback in the price of gold , which slipped $6.00 to $1,791.30 an ounce.
The Canadian dollar is up two-tenths of a penny at $1.0211 (U.S.).
David Parkinson