Wall Street rebounds as investors focus on U.S. economy

09:16, May 13, 2010      

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Wall Street rallied on Wednesday, with major indexes bouncing back to the level before last Thursday 's big plunge, as investors felt relieved about the debt problems in European countries and turned their attention back to the health of the U.S. economy.

The Dow Jones industrial average gained 148.65, or 1.38 percent, to 10,896.91. The Standard & Poor's 500 index rose 15.88, or 1.37 percent, to 1,171.67 and the Nasdaq was up 49.71, or 2.09 percent, to 2,425.02.

Technology stocks led the gains as strong corporate earnings and brightening outlook continued to lift the market. Cisco reported better-than-estimate results after the close of trading, while IBM forecast earnings-per-share may double by 2015.

Apart from that, government data continued to show U.S. economy was heading to recovery. According to the Commerce Department, the nation's trade deficit rose 2.5 percent to a 15-month high in March, as surging oil prices pushed up the cost of oil imports. However, exports rose 3.2 percent to their highest level since October 2008, showing the economy continues to get stronger.

Overseas, Spain announced a more strict austerity plan by cutting wages of state employees and slashing investment spending in the latest attempt to rein in the country's deficit, which helped ease investors' concerns over the European sovereign debt problems.

Meanwhile, Portugal's successful bond sale and new British Prime Minister David Cameron's plans to cut the deficit added to optimism that Europe's debt crisis was under control.

The market suffered severe turbulence in the past two weeks as investors were worried that the debt crisis in Greece would spread to other European countries, which might lead to another financial crisis and derail the global economic recovery.

However, some investors still lack confidence whether Europe's 1-trillion-dollar rescue package was enough to stem the growing debt crisis. The worries about the sustainability of the euro have been driving investors to gold, sending gold prices to a fresh record high.

Among stocks in focus, Morgan Stanley fell more than 2 percent after reports said the investment bank is facing an investigation into its dealings in mortgage securities.



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