A jump in U.S. consumer confidence sent stocks modestly higher Tuesday. Investors were also encouraged by new efforts from European leaders to find more aggressive cures for the region's debt crisis.
The Dow Jones industrial average ended with a gain of 32 points, following a 291-point surge Monday. Retail stocks were among the biggest gainers. Home Depot Inc. rose 5.3 percent. Best Buy Co. rose 5.1 percent. Retailers had record sales over the Thanksgiving weekend.
Stocks started higher and gained momentum after 10 a.m., when the Conference Board, a private research group, reported that its Consumer Confidence Index jumped in November to its highest level since July. That news and the surge in holiday shopping reassured investors that the U.S. economy might be sputtering back to life, said Quincy Krosby, market strategist for Prudential Financial.
"For the market, the fact that Americans are spending is a positive force," said Krosby.
European finance ministers gathered Tuesday to hash out the latest ideas for squelching the crisis. At their regular monthly meeting, the ministers also released the latest installment of emergency loans for Greece.
Europe's proposals for wriggling out of a potential financial catastrophe have become more radical as borrowing costs for the region's large economies, including Spain and Italy, spike. President Barack Obama said in a meeting with top EU officials Monday that if Europe failed to solve its crisis, the U.S. economy would suffer.
Acting with new urgency, Europe's finance ministers were considering wide-ranging plans for protecting its shared currency, the euro, from collapsing. Many of those ideas would have been off-limits until recently, including having countries cede some control over their finances to a central European authority.
In the latest sign of trouble, Italy was forced to pay a high interest rate on an auction of three-year debt Tuesday. The 7.89 percent rate was nearly three percentage points higher than last month, an enormous increase.
The Dow Jones industrial average rose 33.62 points, or 0.3 percent, to close at 11,555.63 Tuesday.
The Dow jumped 291 the day before on expectations that European leaders were moving more aggressively to prevent the region's debt crisis from causing a catastrophic breakup of their currency union.
The Standard & Poor's 500 index rose 2.64, or 0.2 percent, to 1,195.19.
Technology stocks were weak. Corning Inc., which makes glass for flat-screen TVs, slumped 10.8 percent, the most in the S&P 500, after saying a major South Korean customer would no longer do business with it.
The Nasdaq composite, which consists mostly of technology stocks, fell 11.83, or 0.5 percent, to 2,515.51. Netflix lost 3.4 percent after Standard & Poor's lowered its rating on the company's debt, saying it expected losses.
Bank stocks lagged the market after the latest jump in Italy's borrowing costs. Morgan Stanley fell 3.6 percent; Bank of America 3.2 percent. Banks are especially sensitive to Europe's financial problems because they hold billions in European debt. They could suffer huge losses in the event of a financial panic in Europe and a freeze-up in global lending markets.
AMR Corp. plunged 84 percent after the parent company of American Airlines said it would file for Chapter 11 because it could no longer shoulder rising fuel costs and its heavy debt load. Competitor United Continental Holdings Inc. jumped 6.3 percent, and Delta Air Lines Inc. rose 5 percent. AMR Corp. has continued to lose money while other U.S. airlines returned to profitability in the last two years.
Seagate Technology PLC jumped 3.7 percent after the hard drive maker forecast revenue for the current quarter that was higher than analysts were expecting. Citi analyst Joe Yoo said higher hard disk drive prices were driving the gain.
Tiffany & Co. fell 8.7 percent after the luxury retailer forecast fourth-quarter earnings that were below Wall Street's expectations. The quarter includes the holiday shopping season.
Dillard's Inc. slumped 6.8 percent after a Sterne Agee analysts cut his rating on the stock, saying the department store operator's profits could be pressured by an increased in markdowns and sluggish economic conditions.