Moments after Italy’s Prime Minister Silvio Berlusconi announced his resignation Tuesday, stocks in the United States made an afternoon rally and ended the day higher than expected, according to reports.
Berlusconi announced he would resign after Italy passes economic reforms the European Union wants in order to keep the country from further perpetuation the debt crisis rocking Europe.
The Standard & Poor’s 500 Index, the Dow Jones industrial average and NASDAQ all reported end-of-the day boosts.
The S&P 500 jumped more than 1 percent to 1,275.94. NASDAQ also climbed more than 1 percent to 2,727.49. The Dow Jones industrial average climbed 102.02 points to close at 12,170.41, its highest close this month.
Investors showed optimism after the announcement of Berlusconi’s planned resignation.
"The change in leadership is a sigh of relief for the market," said Eric Teal, chief investment officer at First Citizens Bancshares Inc., which manages $4 billion in Raleigh, N.C., to Bloomberg.
"A regime change might be part of the solution to get new ideas flowing. Long term, we need to look at what's plan B and C that the new leadership will bring so that the market can continue moving higher,” Teal added.
Investors and analysts hinted the markets could continue to jump as concrete news of Italy’s plan to transition power emerges.
"The market is up because at least one half of the battle is done, but we still have the other half left. We still need to find out how he will be replaced," said Jack DeGan, chief investment officer at Harbor Advisory Corp in Portsmouth, N.H., to Reuters.
Berlusconi’s policies may negatively affect markets across the globe, according to reports.
“Berlusconi was increasingly seen as a liability by his European peers in Germany and France but also the European Central Bank,” said Jan Randolph, head of sovereign risk analysis at IHS Global Insight in London, to Bloomberg.
“He couldn’t carry through the reforms that he promised. He’s had over two decades at the helm governing Italy and avoided reform, and now it’s crunch time,” Randolph added.
It is unclear if the increase in the U.S. market will continue throughout the week.