By David Berman
Stocks ended Tuesday with strong gains on optimism about the European debt crisis, although the earlier rip-roaring rally subsided as the trading day ticked down.
The Dow Jones industrial average closed at 11,190.69, up 146.83 points or 1.3 per cent – down nearly 180 points from its intraday high in the final 90 minutes of trading. The broader S&P 500 closed at 1175.38, up 12.43 points or 1.1 per cent. In Canada, the S&P/TSX composite index closed at 11,821.09, up 113.90 points or 1 per cent, after being up as much as 350 points earlier.
The early gains had been driven by speculation that European authorities were making headway in coming up with bold solutions for dealing with the debt crisis, including moves to recapitalize banks and boost the euro zone’s rescue fund.
However, there were also early signs that optimism flowing out of Europe might not be well-grounded in fact. For example, the German government rejected the idea of increasing the size of the rescue fund, arguing that it could jeopardize the triple-A credit ratings enjoyed by some euro zone countries.
U.S. and Canadian financials, which had been among the strongest performers, faded into the close. Bank of America Corp. ended the day down 1.8 per cent while JPMorgan Chase & Co. fell 0.3 per cent. Royal Bank of Canada trimmed its gain to just 0.2 per cent and Toronto-Dominion Bank fell 0.1 per cent.
Still, the rally persisted in some areas of the market, particularly commodity producers. Gold surged to $1,652.50 an ounce, up $57.70. Crude oil rose to $84.45 a barrel, up $4.21. Among key commodity producers, Suncor Energy Inc. rose 2.6 per cent, Chevron Corp. rose 2.2 per cent and Teck Resources Ltd. rose 2.7 per cent. However, Barrick Gold Corp. fell 0.8 per cent.
Meanwhile, Research In Motion Ltd. (RIMM) rose 3.6 per cent amid rumours that activist investor Carl Icahn had taken a significant stake in the BlackBerry maker.