Stocks surge over eurozone rescue plan

Wall Street surged Thursday to multiyear highs after the European Central Bank provided more information about an unlimited bond-buying program that could save troubled countries from leaving the eurozone, possibly preventing another global recession from reaching the U.S.

The Dow Jones industrial average, Standard & Poor’s 500 index, and Nasdaq composite index all hit record highs under President Obama.

The Nasdaq soared 66.54 points to 3,135.81, hitting its highest level in 12 years. The Dow jumped 244.52 points to 13,292, reaching its highest point since December 2007. The S&P gained 28.68 points to 1,432.12, its highest mark since January 2008.

The markets were also boosted to a lesser extent by expectations of a positive jobs report, which will be released on Friday.

The European Central Bank fleshed out plans for an “Outright Monetary Transactions” program that aims to help troubled European nations like Greece, Spain and Italy stave off another crisis.

The program was first announced at an ECB meeting on Aug. 2, and previously hinted at by President Mario Draghi in late July, when he said, the central bank “will do whatever it takes to preserve the euro. And believe me, it will be enough,” but few specifics were provided until Thursday’s monthly meeting.

The ECB promised to buy as many bonds as necessary along with implementing tough structural reforms.

Thursday’s development is expected to ease growing concerns that Greece would leave or be kicked out of the eurozone if it doesn’t solve its financial problems.

Experts say a Greek exit and the economic chaos it would create could complicate Mr. Obama’s re-election efforts.

“It would give ammunition to the Republicans,” IHS Global Insight chief U.S. economist Nigel Gault said. “Republicans would point to Europe and say, ‘We’ve been saying that the U.S. has too much debt, and therefore, it can be a problem for the economy. You need to bring in Republicans who will reduce the deficit and deal with the debt.’ It would be used to attack the president.”

Economists are concerned that Greece leaving the eurozone could set a dangerous precedent for the larger economies in Spain and Italy.

“If Greece leaves … that demonstrates that the euro is not necessarily forever, countries can leave, so that could cause concern that other countries would leave,” Mr. Gault said.

Starting over outside the eurozone would mean switching to a new currency. Investors are afraid of waking up and finding overnight the euros in their bank accounts have been converted to less valuable drachmas, or pesetas, or lire.

“It could lead to panic, people trying to take their money out and convert to cash before this happens. Or moving euros out of Italy into somewhere safer like Germany,” Mr. Gault said.

Investors in the troubled European economies are also worried about Spain and Italy dragging their feet on fiscal reforms.

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