Stocks rise as Greece nears debt solution
NEW YORK — Stocks closed higher for the third day in a row Wednesday after Greece cleared a hurdle toward getting more emergency loans. Financial stocks rose after Bank of America reached a settlement with investors over failed mortgage securities.
Greek lawmakers passed an austerity bill that brought the country closer to getting a financial backstop it needs to avoid defaulting on its debt. A default by Greece would shock global markets and freeze lending to other heavily indebted European countries.
The $17 billion relief package from international lenders does not eliminate the possibility that Greece will default, but it does buy Greece and other European countries more time to repair their budgets.
“The hope is that through the passage of time and slow improvement of finances, markets will become a little more forgiving,” said Wasif Latif, a vice president at USAA Investment Management.
The Dow Jones industrial average rose 72.73 points, or 0.6 percent, to close at 12,261.42 Wednesday. The Standard & Poor's 500 index rose 10.74, or 0.8 percent, to 1,307.41. The Nasdaq composite rose 11.18, or 0.4 percent, to 2,740.49.
Financial companies in the S&P 500 rose 2.1 percent after Bank of America Corp. reached an $8.5 billion settlement with investors over claims it sold them bad loans. The investors said Bank of America violated agreements with them by selling them low-quality mortgage-backed securities that lost value when the housing market collapsed. Much of the losses stem from BofA's 2008 purchase of the troubled lender Countrywide.
Bank stocks also got a lift from news that the Federal Reserve plans to limit the fees banks can charge retailers for swiping debit cards to 21 cents. That's higher than the 12 cents the Fed first proposed.
Relief that Bank of America settled with investors sent the lender's stock up 3 percent. Bank of America is still down 24 percent over the past year, far more than any other major U.S. bank.
It was the third and largest settlement Bank of America has struck this year over mortgage investments. The bank reached a $2.6 billion settlement in January over home loans sold to the government-backed mortgage agencies Fannie Mae and Freddie Mac. In April, the company agreed to pay up to $1.6 billion to an insurer that demanded the bank repurchase faulty mortgages it had been sold.
Energy stocks rose more than 1 percent after oil prices rose above $95 on a report that U.S. crude supplies fell last week. The drop suggests demand for oil might be rising.
Monsanto Co. gained 5 percent after the chemicals company reported earnings that beat analysts' expectations. BJ's Wholesale Club rose 4.6 percent after announcing that two private equity firms would buy the warehouse chain.
More than two stocks rose for every one that fell on the New York Stock Exchange. Consolidated trading volume was an average 3.9 billion shares.