Stocks push higher, Dow returns to 12,000

A late rally Monday pushed the Dow Jones industrial average back above 12,000 as investors responded to the latest twists in Europe's efforts to control its debt crisis.

U.S. indexes were down for much of the day on worries that Italy could become the next country to run into trouble. Stocks turned higher later on news that Greece would receive the latest installment of emergency aid as long as the country's two main parties commit to implementing economic reforms agreed to by the previous government.

The Dow rose 85.15 points, or 0.71 percent, to 12,068.39, its highest point of the day. The Standard & Poor's 500 index rose 7.89 points, or 0.63 percent, to 1,261.12. The Nasdaq rose 9.10 points, or 0.34 percent, to 2,695.25.

Investors again reacted to whatever was the latest headline out of Europe. The region's problems have been offsetting optimism about strong U.S. corporate earnings and signs of improvement in the economy.

"Every day it seems like it's the butting of heads between whatever the latest rumor is out of Europe with good economic data and corporate earnings," said Karyn Cavanaugh, a market strategist with ING Investment Management. "It's overshadowing the fact that earnings are on track to be the best year ever."

Fears Italy could become the next victim of Europe's debt crisis kept investors uneasy. Borrowing rates spiked Monday to the highest level since the country adopted the euro.

Unlike Greece, Portugal or Ireland, all of which received financial lifelines, Italy has too much debt to be rescued by its European neighbors. Prime Minister Silvio Berlusconi has rejected calls to resign to make way for more cost-cutting and reform, but pressure on him mounted Monday.