The Dow Jones Industrial Average (INDEX: ^DJI) hit another high-water mark today, gaining 69 points or 0.5% to reach 13,323. That's the highest point the blue chips have hit since the end of 2007, as investors were optimistic about two announcements coming later this week. Germany's highest court will decide tomorrow whether Europe's biggest economy can join the European Stability Mechanism, the permanent bailout fund the eurozone recently set up. In addition to the gain in domestic markets, the DAX jumped 1.3%, so there seems ample reason to believe that the court will uphold the ESM.
On Thursday, the Federal Reserve will release its interest-rate decision, and many believe it could announce plans for a third round of quantitative easing, QE3, that could help stimulate the economy. Economists have given QE3 a 60% chance of implementation when the Fed speaks on Thursday.
Bank of America (NYSE: BAC) was a big winner on the day, gaining more than 5% on hopes that the expected financial infusion will encourage greater borrowing, and its CFO also said the bank was ready to begin growing through new loans after two years of selling off secondary assets that included insurance departments and credit cards.
Alcoa (NYSE: AA) also moved up more than 3% on the day, as prospects of a resurgence in the world economy could put a charge into the beaten-down commodity producer. The company has been barely profitable in the past year, and investors have been hungry for any piece of good news.
Outside the Dow, Facebook (Nasdaq: FB) shares gained 3.3% during the open session and an additional 3.4% in after-hours trading as CEO Mark Zuckerberg made his first public remarks since the social network's much-maligned IPO. Zuck said he was disappointed in the decline in share value but also reassured investors, telling them Facebook has a number of new products in the works. The young CEO also squashed rumors of a smartphone, but he said search will be a key growth area and that the company is also planning on offering new advertising products. He emphasized the importance of mobile, spoke about the need to continue building Facebook's smartphone app, and admitted that his company had made mistakes by embracing HTML 5 instead of creating native code.
Keep an eye on Facebook shares tomorrow to see whether they continue their upward trend as evidence of increased investor confidence, as well as the decision from the German court, which should come out before American markets open.
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