Dow soars on good news on housing market, Europe

Encouraging signs out of Europe and a surprisingly strong report on the U.S. housing market drove the Dow Jones industrial average up more than 300 points Tuesday. It was the best day for stocks this month.

The Spanish government pulled off a successful debt auction and gauges of business and consumer confidence in Germany rose unexpectedly. Both helped ease worries about Europe’s debt crisis. The dollar fell against the euro and U.S. government bond prices dropped as traders shifted money out of the safest assets.

Borrowing costs for the Spanish government plunged at an auction of short-term debt, a sign that investors are becoming more confident in the country’s ability to pay.

The Dow gained 337.32 points, or 2.9 percent to close at 12,103.58. It lost 100 points the day before.

Europe’s major stock markets also climbed. Germany’s DAX soared 3.1 percent. France’s CAC-40 jumped 2.7 percent.

The Standard & Poor’s 500 index gained 35.95 points, or 3 percent, to 1,241.30. Only six stocks in the index fell. The Nasdaq composite index rose 80.59, or 3.2 percent, to 2,603.73.

 

Fed advises largest banks to hold extra cash for crises

The Federal Reserve on Tuesday said the largest U.S. banks and financial companies should hold extra cash on their balance sheets to cushion themselves against financial crises.

The proposal by the chief U.S. banking regulator will affect banks with more than $50 billion in assets. There are even stricter rules for companies with more than $500 billion in assets, such as JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc.

Fed officials didn’t give a timeline for when the rules will be implemented but said the final rules will be released only after the regulators will have a chance to incorporate comments from the public. The Fed is accepting comments for 90 days.

The rules are part of new regulations proposed under the Dodd-Frank Act, which was passed last year. The new law was written to overhaul the financial system and curb practices that were thought to be responsible for the financial crisis.

 

Cigarette makers, feds offer views on delaying lawsuit

America’s largest cigarette makers said Tuesday that the federal judge presiding over a decade-old lawsuit against the tobacco industry should delay her decision while other cases challenging new tobacco regulations are decided. The Justice Department, however, argued the case should move forward expeditiously.

U.S. District Judge Gladys Kessler in Washington had ordered the parties to submit their views on whether to delay a decision in the case in which she found the companies – including Philip Morris USA, maker of top-selling Marlboro cigarettes – masked the dangers of smoking.

Kessler had noted that the corrective advertising that the Justice Department wants the industry to be required to pay for under her 2006 ruling are “significantly different from the verbal and pictorial advertisements” required by the Food and Drug Administration under new authority it gained in 2009.

Tobacco companies also have brought two newer cases challenging regulations the FDA proposed using that new authority.