Wall Street rebounds after Italian PM promises to leave

Wall Street rebounded on Tuesday as investors cheered for Italian Prime Minister Silvio Berlusconi' s promise to resign. Berlusconi announced that he would resign after Parliament passes economic reform measures. The vote on the plan was scheduled for next week. Investors thought Berlusconi was an obstacle to executing the country's economic reforms as well as cutting debt. They believed that Berlusconi's resignation will help Italy deal with debt drama and improving the country's economic instruction. Italy became a key focus for investors this week. Fears of EU sovereign debt contagion continue to fester, as the 10-year Italian bond yields have now surged to a record high of 6.63 percent, a level close to the 7-percent mark that forced earlier bailouts in Greece, Portugal and Ireland. As Italy is the world's third largest debtor behind only the U. S. and Japan with 1.6 trillion euro in total sovereign debt outstanding, investors worry the recent rapid rise in its borrowing costs was unsustainable. Investors also worried that an Italian bailout would take more time as the European Financial Stability Fund (EFSF) was not sufficient enough to cover any Italian rescue effort. The Dow Jones industrial average gained 101.79 points, or 0.84 percent, to 12,170.18. The Standard & Poor's 500 jumped 14.80 points, or 1.17 percent, to 1,275.92. The Nasdaq Composite Index rallied 32.24 points, or 1.20 percent, to 2,727.49. The U.S. dollar fell against major currencies in late New York trading on Tuesday with the dollar index losing 0.46 percent to 76. 61 as the euro was bolstered by the news that Italian prime minister will resign. U.S. crude prices gained for the fifth straight session on Tuesday as major oil producers raised their forecasts for world oil demand. Light, sweet crude for December delivery rose 1.28 dollars, or 1.3 percent to settle at 96.80 dollars a barrel on the New York Mercantile Exchange, the highest closing level for a most-active contract since July 28.