Summary Box: Early rally fades on downgrade fears

AP News
|
Posted: Dec 05, 2011 4:45 PM
Summary Box: Early rally fades on downgrade fears

MORNING RALLY: Stocks rose sharply in the first few minutes of trading and remained sharply higher until mid-afternoon. Traders were reacting to statements from the leaders of France and Germany, who are scrambling to show they can rescue the euro union.

EURO HOPES: German Chancellor Angela Merkel and French President Nicolas Sarkozy said they want a fresh treaty for Europe that would impose tighter budget restrictions on their neighbors.

AFTERNOON DRAG: Stocks gave back about half of their gains after news reports emerged that Standard & Poor's will put all nations using the euro on "creditwatch negative," meaning there is a 50-50 chance of a downgrade in the coming months.