U.S. Stocks Rise as Greece Abandons Referendum, ECB Cuts Rates - San Francisco Chronicle

Nov. 3 (Bloomberg) -- U.S. stocks rose, sending the Standard & Poor's 500 Index higher for a second day, as Greece said it won't hold a vote on the nation's bailout and the European Central Bank unexpectedly cut rates.

Qualcomm Inc. jumped 6.8 percent as the maker of mobile- phone chips forecast sales that beat analysts' projections. Kraft Foods Inc. added 3.6 percent after raising its earnings estimate. Jefferies Group Inc. pared its loss to 6 percent as it said it has no "meaningful net exposure" to European sovereign debt after its shares plunged as much as 20 percent earlier today, triggering stock-market circuit breakers.

The S&P 500 added 1.2 percent to 1,253.06 at 12:53 p.m. in New York. The benchmark gauge for American equities has risen 2.9 percent in two days. The Dow Jones Industrial Average increased 145.24 points, or 1.2 percent, to 11,981.28 today.

"They're pushing the Greeks to the wall," Peter Sorrentino, a senior fund manager at Huntington Asset Advisors in Cincinnati, which oversees $14.5 billion of assets, said in a telephone interview. "It's a sobering up moment. On top of that, the ECB's decision to cut rates will take some of the pressure off of the upcoming financing for the Spanish and Italian markets."

Stocks fell earlier this week as Greek Prime Minister George Papandreou announced on Oct. 31 a parliamentary confidence vote and his desire to hold a referendum on the rescue pact. A two-day slump sent the S&P 500 to the level where three rallies stopped in August and September, the top of a price range that prevailed for 10 weeks.

Currency Bloc

Greek Finance Minister Evangelos Venizelos said the nation won't hold a referendum. He was speaking to party lawmakers in Parliament in Athens today. Just hours after saying Greeks need to decide on whether their future is in the euro, Papandreou said the country belongs in the currency bloc.

"Papandreou absolutely blinked in this game of chicken," Michael Holland, chairman and founder of New York-based Holland & Co., said in a telephone interview. His firm oversees more than $4 billion. "The interesting thing is that it took him so long to blink. The world's markets told him he was wrong and he still persisted for an extended period of time. It was insane."

European leaders for the first time raised the prospect of the euro area splintering. German and French leaders holding emergency talks on the eve of a Group of 20 summit today in Cannes, France, withheld 8 billion euros ($11 billion) of assistance.

Lower Rates

Global stocks extended gains as ECB officials unanimously lowered the benchmark interest rate by 25 basis points to 1.25 percent, confounding 51 of 55 economists in a Bloomberg News survey. ECB President Mario Draghi said the rate cut happened partly because "what we're observing now is slow growth heading toward a mild recession."

Earlier today, benchmark gauges erased a rally as a report showed that service industries in the U.S. expanded at a slower pace and consumer confidence plunged, supporting Federal Reserve Chairman Ben S. Bernanke's forecast that the economic recovery will be "frustratingly slow."

The S&P 500 is caught in a "battle" between technical measures sending conflicting signals on whether stocks will rise or fall, Janney Montgomery Scott LLC said.

The biggest monthly rally since 1991 failed to keep the benchmark measure of U.S. equities above its 200-day average, according to data compiled by Bloomberg. At the same time, its 50-day average began rising for the first time since June. The index closed at 1,237.90 yesterday, 2.8 percent below its 200- day level and 3.8 percent above the 50-day figure.

The charts "underscore the battle we're seeing between the market's longer-term declining moving averages and its short- term rising moving averages," Dan Wantrobski, the Philadelphia- based director of technical research at Janney, wrote in a report yesterday. "Due to the close proximity the price action of each benchmark now shares with these indicators, we will likely have an answer soon."

--With assistance from Lu Wang in New York. Editor: Jeff Sutherland

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net