U.S. stocks made a remarkable comeback in afternoon trading on Monday, ending the day in positive territory after the Financial Times reported that China could be stepping into the fray of the European debt crisis by buying Italian bonds and stocks.
The Dow Jones industrial average closed at 11,061.12, up 68.99 points, or 0.6 per cent – after being down about 100 points with little more than an hour left in the trading day. The broader S&P 500 closed at 1,162.27, up 8.04 points, or 0.7 per cent. In Canada, the S&P/TSX composite index failed to rebound, though: It closed at 12,148.83, down 238.71 points, or 1.9 per cent.
North American stocks had begun the day with broad losses, with all 30 stocks in the Dow retreating over concerns that Greece was moving closer to defaulting on its debt obligations – a move that would shake global banks and potentially trigger another financial crisis.
While those concerns persist, the Times reported that at least one other European country that is wobbling under a heavy debt load might have found a saviour in China: China Investment Corp., the sovereign wealth fund with more than $400-billion (U.S.) in assets, has apparently held talks with Italian officials over a plan to buy significant amounts of Italian bonds and make investments in strategic companies.
After the report was published, U.S. indexes made their comeback. Blue-chip technology stocks were among the biggest winners, with Intel Corp. up 2.9 per cent and Cisco Systems Inc. up 1.7 per cent. Home renovation chain Home Depot Inc. rose 1.5 per cent. Financials, which had been among the biggest drags on the index earlier in the day, also rebounded: Bank of America Corp. rose 1 per cent and JPMorgan Chase & Co. rose 1.1 per cent.
However, Canadian stocks remained weighed down by commodity producers, particularly materials stocks. Barrick Gold Corp. fell 2.8 per cent, Potash Corp. of Saskatchewan Inc. fell 2 per cent and Teck Resources Ltd. fell 3.6 per cent. Gold fell to $1,813.30 an ounce, down $46.20.
Crude oil rose to $88.19 a barrel, up 95 cents, after being down earlier in the day. However, oil producers failed to keep up: Suncor Energy Inc. fell 3.2 per cent and Canadian Natural Resources Ltd. fell 1.8 per cent.
Financials were also weak, with Manulife Financial Corp. down 2.5 per cent and Royal Bank of Canada down 2.7 per cent.