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Markets: investors bought stocks again Friday on the latest reassuring news about the economy.

Markets: Investors bought stocks again Friday on the latest reassuring news about the economy. This time, it was about European banks. European regulators, who issued the results of what are called "stress tests" on the banks, said Friday that only a handful would struggle if the continent's economy weakens. That helped send the Dow Jones industrial average up more than 100 points, which gave the index a two-day gain of more than 300. The latest second-quarter earnings reports also convinced investors that the economic recovery is proceeding. So did announcements that General Electric Co. is raising its dividend and reports that French drug maker Sanofi-Aventis is interested in buying Genzyme Corp. Investors were initially cautious about the stress tests, which measure how well banks would fare if government debt problems and the region's economy worsened. Europe's debt issues have sent stocks falling worldwide since April amid concerns they could slow the global economic recovery. There were some concerns in the market that the tests might not have been rigorous enough. Because the results were issued after the close of trading in Europe, it won't be known until today how investors on the continent react. And, if they react badly, that will likely prompt U.S. investors to sell.

The stress tests showed that just seven of 91 European banks tested would fail. The European Union said the results should put to rest questions about the health of the continent's financial sector. Financial stocks, which had struggled early in the day Friday, started to climb after the results were released at midday. Brian Peardon, a wealth adviser at Harrison Financial Group, said there could be an initial "gut" reaction to the results based on the headlines alone, but the full impact on the market won't come until this week because there is so much information to sort through. "It will take the weekend to digest whether they're good or bad," Peardon said.

The Dow closed the week up 326.72, or 3.2%, at 10,424.62. The S&P 500 gained 37.78, or 3.5%, to 1,102.66. The Nasdaq Composite leaped 90.42, or 4.2%, to 2,269.47.
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Title Annotation:WALL ST./FINANCE
Publication:MondayMorning
Date:Jul 26, 2010
Words:363
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