Stocks Rebound on News of European Credit Agreement (BAC, GS)

Stocks reversed themselves after yesterday’s dip on the words of French President Nicolas Sarkozy on the need for European leaders to take drastic action to curb Europe’s sovereign debt crisis. Markets reacted positively in spite of an S&P credit downgrade for 24 Italian banks. In a talk at the Boston Federal Reserve, Chairman Ben Bernanke stated that the Fed may be needed to exercise monetary policy in order to combat asset price bubbles in the future. In corporate news, Bank of America (BAC) posted a mild third quarter gain, boosting its stock more than 10 percent. Goldman Sachs Group (GS), on the other hand, saw an over $300 million loss primarily from write-downs, but its stock went up as investors bet on a turnaround.

Word on the Street

• Stocks jumped today on news that France and Germany had agreed to the euro bailout plan.
• Bank of America (BAC) posted a third quarter profit, but lending and investment income was down.
• Goldman Sachs (GS) stock is up in spite of a third quarter loss.
• Fed Chairman Ben Bernanke argued that monetary policy may be needed to combat asset bubbles.
• 24 Italian banks were downgraded by S&P.

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