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Stocks turn higher after Italy's Berlusconi says he will resign following passage of budget
NEW YORK (AP) ' Stocks turned higher Tuesday once investors got the news they had been hoping for: Italian Prime Minister Silvio Berlusconi would resign once a new budget was passed. The Dow Jones industrial rose 36 points in early afternoon trading.
Italy became a key focus for investors this week after doubts emerged that the country would go through with a tough package of austerity measures. Many investors saw Berlusconi as an obstacle to sweeping economic reforms that would be needed to help Italy cut its debt load and avoid sinking into a debt crisis.
Yields on Italian government bonds spiked close to 7 percent Tuesday, a sign that markets are questioning the country's ability to pay its debt. Unlike Greece, Portugal or Ireland ' all of which received financial lifelines ' Italy has too much debt to be rescued by its European neighbors.
U.S. stock indexes turned lower after Berlusconi narrowly survived a confidence vote, an indication that he might continue to cling to power. Indexes turned higher immediately after headlines crossed around 2 p.m. Eastern saying that Berlusconi had promised to step down after the Italian parliament passes economic reforms being demanded by the European Union.
Europe's debt crisis has dictated much of the trading in financial markets since the beginning of October. Investors fear that a default by Greece or another nation that shares the euro currency could lead to a widespread financial crisis similar to the one in 2008 after the fall of Lehman Brothers.
"Europe is the last big question hanging over the market, and drowned out a decent earnings season," said Rick Fier, vice president of equity trading at Confier Securities. "The market has been so whipsawed lately that it's really just staying in place until we know some more outcomes."
The Dow was up 36 points, or 0.3 percent, at 12,104 shortly after 2 p.m. Eastern. Wal-Mart Stores Inc. rose 2.2 percent, the most of the 30 stocks in the Dow.
The S&P 500 rose 7, or 0.5 percent, to 1,267. The Nasdaq composite rose 16, or 0.6 percent, at 2,711.
European shares were broadly higher, but also gave up some of their gains after the results of the Italian vote came out. Italy's main index was up 0.7 percent. It had been up 2.5 percent earlier in the day. Germany's main index rose 0.6 percent, France's 1.3 percent.
In the U.S., the Labor Department said employers advertised more jobs in September than at any other point in the past three years. The 7 percent increase in job openings are a hopeful sign that companies may step up hiring.
Priceline.com Inc. rose 5.6 percent after saying that its third-quarter earnings more than doubled from a year earlier. Most of the gains were attributed to a jump in hotel bookings.
Activision Blizzard Inc. gained 0.6 percent ahead of the company's earnings report. Investors expect the company's latest "Call of Duty" video game to sell about 10 percent more units than last year's version. Auction house Sotheby's fell 7.6 percent after the company posted a wider-than-expected loss in the third quarter.