Wall Street Journal, September 26, 2011

Stocks jumped and blue chips staged their biggest percentage gain in more than a month, as investors bet that efforts will be taken to stem Europe’s sovereign-debt crisis.

The Dow Jones Industrial Average climbed 272.38 points, or 2.5%, to 11043.86, clawing back more than one-third of last week’s losses. The measure leapt to an early triple-digit gain, gave back almost all of it midsession and then moved higher in the afternoon. The action follows the Dow’s biggest weekly point drop since October 2008, spurred by worries of a Greek default and turmoil in global markets.

The Standard & Poor’s 500-stock index gained 26.52 points, or 2.3%, to 1162.95. The Nasdaq Composite was the laggard, gaining 33.46 points, or 1.4%, to 2516.69, after spending much of the day in negative territory. Trading volume was slightly above the recent average, with 4.55 billion shares changing hands in New York Stock Exchange composite volume.

Stocks closed near session highs following reports that a “special purpose vehicle” to help stem Europe’s debt contagion was in advanced development. Those reports followed a European Central Bank official’s endorsement of a more aggressive bailout plan and another official’s remark that the ECB can’t rule out an interest-rate cut.

“The market was in the mood to have a bounce, [even though] it’s just talk and more talk, a lot of supportive talk,” said Tony Norris, co-manager of the Wells Fargo Advantage International Bond Fund in London. “Unless we see more action, it’s going to be a very short respite.”

The financial sector was the strongest in the S&P 500, rising 4.4% in a reflection of easing European debt worries. J.P. Morgan Chase was the strongest blue chip, rising $2.06, or 7%, to $31.65, followed by Bank of America, which gained 29 cents, or 4.6%, to 6.60.

Technology stocks were the session’s underperformers. Apple lost $1.13, or 0.3%, to $403.17, after Wall Street analysts speculated that the company is planning iPad production cuts. Also weighing on the technology sector, Freescale Semiconductor Holdings lowered its quarterly sales outlook, adding to recent warning signs from chip companies. The stock fell 12 cents, or 1%, to 12.12.

Boeing advanced 2.50, or 4.2%, to 62.01, after the aerospace and defense company delivered its first 787 Dreamliner to Japan’s All Nippon Airways on Sunday.

Does the recent volatility in the markets indicate the death of equities? Paul Vigna makes a stop on Mean Street to discuss.

Amid this week’s volatile market activity and over economic uncertainty, are we seeing a replay of the 1930s. MarketWatch columnist Mark Hulbert explains.

Berkshire Hathaway’s Class B shares gained 5.72, or 8.6%, to 72.09. The company’s board approved a plan to buy back its stock, an indication that Chairman Warren Buffett believes the shares are undervalued.

Clorox lost 2.96, or 4.3%, to 66.44, after billionaire investor Carl Icahn withdrew his 11 nominees to replace the household-product company’s board after determining his plan to sell the company would be opposed by shareholders.

Eastman Kodak slumped 64 cents, or 27%, to 1.74, after the imaging company late Friday said that it borrowed $160 million against its credit line, which raised fears of a cash shortage.

MELA Sciences surged 1.75, or 55%, to 4.93, after the company received an approvable letter from the Food and Drug Administration for its MelaFind device, used to diagnose melanoma.

Macy’s added 1.70, or 6.6%, to 27.32. The retailer said it plans to add 4% more seasonal workers for this holiday season, bucking forecasts for sluggish retail industry hiring.

Odyssey Marine Exploration gained 20 cents, or 7.5%, to 2.86. The deep-sea exploration firm said it confirmed the identity and location of the British shipwreck SS Gairsoppa, which was carrying seven million ounces of silver when it was torpedoed by a German U-boat in 1941. Odyssey will be able to keep 80% of the cargo.

In economic data, new-home sales fell for the fourth straight month in August. The Federal Reserve Bank of Chicago’s National Activity Index showed a weak reading for August.