Stocks advanced on both sides of the Atlantic overnight as most US companies seem to have escaped the latest quarterly earnings season relatively unscathed, while there are reasons to be optimistic that Europe's sovereign debt crisis is being kept in check.
In late afternoon trading in New York, the Dow Jones Industrial Average rose 0.56 per cent, the Standard & Poor's 500 Index gained 0.55 per cent and the Nasdaq Composite Index climbed 1.04 per cent. In Europe, the Stoxx 600 Index finished the session with 0.5 per cent advance on the previous close.
German Chancellor Angela Merkel's government backed the European Central Bank's bond-buying plan, Bloomberg News reported, citing a government spokesman. ECB President Mario Draghi has said the central bank will purchase short-dated bonds of Italy and Spain to help ease their borrowing costs if and when needed.
The yield on Spain's two-year note sunk 48 basis points to 3.48 per cent, while the yield on Italian two-year notes fell eight basis points to 3.05 per cent.
The commitment to help both countries is a welcome sign for investors as the strains of the euro zone crisis has hampered the recovery of the world's largest economy. Still, with lowered expectations, the most recent round of American quarterly earnings has managed to by and large surpass these estimates.