Stocks rally amid optimism over Europe

Brendan Mcdermid / REUTERS

Traders work on the floor of the New York Stock Exchange.

By NBC News and wire services

Updated at 11:05 a.m. ET: Stocks rallied at Thursday?s opening bell after European Central Bank President Mario Draghi said his bank is ready to do whatever it takes to preserve the single currency.

The news buoyed investors worried about the impact of the ongoing debt crisis in Europe on the U.S. economy.

The Dow Jones industrial average rallied over 200 points at the start of trading, but was lately off that high.

Speculation had been rising that the ECB, which holds a policy meeting next week, is considering new measures to tackle the euro zone's debt crisis as countries such as Spain and Italy struggle to fund themselves and evidence grows of a region-wide economic slowdown.

"Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough," Draghi told a pre-Olympic games investment conference in London.

In a reference to the high premiums peripheral European nations including Spain are forced to pay to raise funds, Draghi said: "To the extent that the size of the sovereign premia hamper the functioning of the monetary policy transmission channels, they come within our mandate."

Before the speech the problems of Spain and Greece had dominated market attention.

Facebook is set to deliver it's first-ever financial results as a public company after the close of trading Thursday.

A worry for Facebook came late Wednesday when social game maker Zynga delivered disappointing financial results. The gaming company reported a more challenging environment on the Facebook web platform, where it makes money by offering free games and selling virtual goods.

Zynga's shares were lately down sharply.

In economic news, a report showed the number of Americans filing new claims for jobless benefits fell last week to near a four-year low, a hopeful sign for a labor market that has shown signs of weakness.

Initial claims for state unemployment benefits dropped 35,000 to a seasonally adjusted 353,000, the Labor Department said on Thursday.

That was a much sharper drop than economists expected. The prior week's figure was revised slightly higher.

Reuters contributed to this report.

Lee Sachs, Alliance Partners CEO, weighs in on comments made today by the ECB's Mario Draghi's pledge to do whatever is needed to save the euro zone.

Source: http://marketday.nbcnews.com/_news/2012/07/26/12967080-stocks-surge-amid-optimism-over-europe?lite

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