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Stocks soar in late trading on reports that France and Germany agree to boost rescue fund
NEW YORK (AP) ' Stocks jumped in late afternoon trading on reports that France and Germany have agreed to boost a rescue fund as part of an effort to stem the European debt crisis.
The Dow Jones industrial average was up 234 points, or 2 percent, to 11,631 at 3:14 p.m. Eastern. The Dow added more than 100 points within minutes after the report.
The Standard & Poor's 500 index rose 28 points, or 2.4 percent, to 1,229. The Nasdaq composite rose 48 points, or 1.8 percent, to 2,663.
Banks and homebuilders also pulled the stock market higher Tuesday. Bank of America Corp. rose 10 percent in afternoon trading after it beat earnings expectations for the third quarter thanks to accounting gains and the sale of a stake in a Chinese bank.
Goldman Sachs rose 5 percent, even after reporting just its second quarterly loss since going public in 1999.
There was also better news from the housing market, which has rattled banks since the real estate collapse.
A survey of U.S. homebuilders showed they are less pessimistic about the struggling market. The National Association of Home Builders said its index of builder sentiment rose from 14 to 18 this month, the highest level since May 2010. But any reading below 50 reflects overall pessimism.
Building company stocks jumped on the news. D. R. Horton Inc. and PulteGroup Inc. soared 11 percent. Lennar Corp. jumped 9 percent.
Markets wavered in early morning trading after some disappointing corporate earnings reports and reports that France and Germany might not reach an agreement on additional support for Greece. An agreement between the two countries is seen as the bedrock for a rescue package that can pass all 17 countries that share the euro.
The ratings agency Moody's also said late Monday that the stable outlook for France's top-notch credit rating is under pressure. On Tuesday, that country's finance minister said that the economy will likely grow a rate of less than 1.5 percent next year. France is Europe's second-largest economy.
The Greek government is widely expected to go through some kind of default or restructuring of its debt. If that process becomes disorderly, European banks could suffer big losses on Greek government bonds and that could spread overseas, jolting global credit markets.
Tuesday brought full day of corporate earnings reports in the U.S. International Business Machines tugged on the Dow average, falling 4 percent, the most of any Dow stock by far. IBM reported quarterly revenues that fell short of Wall Street estimates.
UnitedHealth Group Inc. fell 5 percent after its third-quarter profit dipped. The country's largest health insurer by sales said medical costs climbed and more patients visited their doctors' office.
Coca-Cola Co. lost half of 1 percent after narrowly beating Wall Street's earnings estimates. Johnson & Johnson rose 1 percent after posting a 6 percent in decline in third-quarter profit, roughly in line with analyst expectations.
Apple Inc. and Intel Corp. will report their results from the last quarter after the market closes.