Market Commentary and Intraday News

US stocks rise; Knight Capital gets lifeline

317 days ago

By PALLAVI GOGOI
AP Business Writer

(AP:NEW YORK) U.S. stocks were marching upward, riding a tailwind of optimism from the most recent job numbers released last week.

On Monday, beleaguered stock trading company Knight Capital Group said it has lined up to $400 million in financing that will allow the firm to continue to operate. Knight was fighting for survival after a disastrous software glitch in its systems sent the trading of dozens of stocks into chaos last week.

Best Buy's stock soared after its founder offered to buy the company.

The Dow Jones industrial average climbed 70 points to 13,166 just after noon on Monday. The broader S&P 500 index added six points at 1,397. The Nasdaq index rose 26 points to 2,994.

Stock indexes also rose in Europe. There is also a growing belief that the European Central Bank is preparing to do more in the months ahead to contain the continent's debt crisis. Germany's DAX and the CAC-40 in France both rose 1 percent. Spain's IBEX 35 gained 4.4 percent despite a five-hour blackout from a technical problem that halted trading for much of the day.

In the U.S., there are no economic indicators being released Monday, so the surprisingly strong jobs report released Friday continued to dominate trading. The pickup in hiring last month, which was far greater than analysts were expecting, brought buyers back to the market following nearly a week of declines.

"Mutual fund managers and hedge funds have sizable holdings in cash and they need to put those to work," said Richard Cripps, chief investment officer for Stifel Financial. "There's optimism over the progress made in Europe and also constructive news from the U.S. economy."

The U.S. economy generated 163,000 jobs last month, the fastest pace since February. That's a sign that the U.S. may be resilient enough to pull out of a midyear slump and grow modestly, even as the rest of the world slows down. Investors have been driving markets higher on hopes that the positive momentum will continue.

Knight Capital's stock fell 90 cents, or 22 percent, to $3.15 Monday. It's down 70 percent since last Tuesday, the day before a software malfunction caused its computer systems to send erroneous orders flooding into the market.

Knight said a group of investors agreed to buy $400 million of preferred stock that can be converted into a 73 percent stake in the firm.

Knight takes orders for stock trades from brokers like TD Ameritrade and E-Trade and banks. It then routes them to the exchanges where stocks are traded, like the New York Stock Exchange. Its future was thrown into doubt when the trading glitch funneled erroneous orders to the market for 45 minutes Wednesday.

Going in the opposite direction is Best Buy Co., which jumped 10 percent after founder and former CEO Richard Schulze offered to buy the company at a premium to its stock price. Schulze, 71, is its largest shareholder with a 20 percent stake.

Among other stocks making big moves:

_ Pluristem Therapeutics which climbed 79 cents, or 24 percent, to $4.08. The Israeli drugmaker said a cancer patient's life was saved with the use of certain cells it had developed.

_ Cognizant Technology Solutions jumped $6.65, or 11.5 percent, to $64.51 after the company's second-quarter results beat Wall Street's view and it raised its full-year earnings forecast.

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