US stocks rise; Knight Capital gets lifeline
By PALLAVI GOGOI AP Business Writer August 6, 2012 10:50AM
FILE - In this Friday, Aug. 3, 2012 file photo, trader Ryan Falvey, foreground right, works on the floor of the New York Stock Exchange. (AP Photo/Richard Drew, File)
Updated: August 6, 2012 11:14PM
NEW YORK (AP) — U.S. stocks marched upward Monday, riding a tailwind of optimism from the most recent job numbers released last week. Other global markets also rose.
Also on Monday, Knight Capital Group, the trading firm fighting for survival after a disastrous software glitch sent stock trading haywire last week, said it has lined up $400 million in financing that will allow the firm to continue to operate. And the founder of Best Buy has offered to buy the company.
The Dow Jones industrial average climbed 78 points to 13,174 at around 11:30 a.m. on Monday. The broader S&P 500 index added seven points at 1,398. The Nasdaq index rose 23 points to 2,991.
There is also a growing belief that the European Central Bank could do more in the months ahead to contain the continent’s debt crisis. In Europe, benchmark indices Germany’s DAX and the CAC-40 in France were both up 1 percent, while Spain’s IBEX 35 gained 4 percent.
In the U.S., there are no economic indicators being released Monday, so the surprisingly positive jobs figures released Friday continued to dominate trading.
It was enough to provide optimism to money managers who had recently been pulling out of stocks due to the recent volatility in the global stock markets due to unease over Europe’s debt crisis.
“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 at the fastest pace since February, a sign it is 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 the markets higher on hopes that the positive momentum will continue.
Knight Capital’s stock fell $1.13, or 28 percent, to $2.90 in early trading 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 will also add three seats to its board.
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 15 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 66 cents, or 20 percent, to $3.97. The Israeli drugmaker said a cancer patient’s life was saved with the use of certain cells it had developed.