Dow up 156 as plans form to contain Greek turbulence

Central bankers are planning how to keep global markets running if Sunday's Greek election results in a leftist win. Microsoft will buy Yammer for $1 billion-plus. Jobless claims rise. Oil and natural gas rally as OPEC leaves quotas alone.

By Charley Blaine Jun 14, 2012 12:31PM
Charley BlaineUpdated: 10:25 p.m. ET

A big stock market rally abruptly accelerated late today on reports that central banks around the world are working on a plan to ensure adequate liquidity for global markets after Sunday's elections in Greece.

The plan would be implemented if the leftist Syriza party gains a majority in the Greek parliament. The party has vowed to renegotiate the terms of Greece's  austerity packages with the eurozone nations, the European Central Bank and the International Monetary Fund. The worry is that Syriza would pull Greece out of the eurozone -- a development that could cause global financial markets to seize up.

At the same time, the Bank of England unveiled plans to try to insulate the United Kingdom from the growing financial problems in Europe.

The reports came as the U.S. stock market was starting to lose ground. The Dow Jones industrials ($INDU) had seen a gain of 115 points fall to about 85 points. Right after 3 p.m. ET, the blue chips suddenly saw their gain jump to as many as 202 points. And almost as quickly, the gain was trimmed.

The Dow closed up 156 points to 12,652. The Standard & Poor's 500 Index ($INX) was up 14 points to 1,329, and the Nasdaq Composite Index ($COMPX) gained 18 points to 2,836.

Article continues below.
The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, was up 13 points to 2,540. Apple (AAPL), the biggest single influence on the index, recovered from a slump after the open that saw the stock fall to $568.53. It closed down 63 cents to $571.53.

With the rally, the Dow is up 0.8% for the week with a day to go, led by Johnson & Johnson (JNJ), up $1 for the day and 3.9% for the week. The S&P 500 is up 0.3%. The Nasdaq and Nasdaq-100 are off 0.8% heading into Friday.

The day includes the Federal Reserve's May report on industrial production and the University of Michigan's Consumer Sentiment Index.

Futures trading suggests a modestly higher open for stocks. Crude oil (-CL) in New York and gold (-GC) were trading higher in electronic markets.

Microsoft's Yammer deal
Late today, The Wall Street Journal reported that Microsoft (MSFT) will buy Yammer, which builds private social-networking sites inside companies. The price is reportedly more than $1 billion, The Journal said. (Microsoft is the publisher of MSN Money.)

The purchase of Yammer could add social-networking functions to Microsoft's Office suite of software. Microsoft's Sharepoint product has with some functions that overlap with Yammer.

Yammer says its software was built from "the ground up" with Facebook DNA. Facebook's founding president, Sean Parker, is a director. Yammer and Facebook share the same first investor, Peter Thiel.

A wild and dramatic day
The central-bank news came in the course of a dramatic and volatile day . There was a downgrade of French debt by Egan-Jones, the same agency that downgraded Spanish debt to junk status on Wednesday. (Moody's also downgraded Spain to just above junk status.)

Yields on Spanish bonds surged; the 10-year bond yield nearly hit 7% for the first time before dropping back slightly. The 10-year Italian bond was yielding 6.16%, its highest level since late January.

The U.S. market opened with a rally built on hopes that all the crummy news of late means the Federal Reserve will announce another round of quantitative easing, perhaps even at next week's meeting. Quantitative easing is the buying of government securities to keep interest rates low.

There was disappointment with today's report on U.S. jobless claims, which rose to a seasonally adjusted 386,000 in the latest week, the Labor Department said. Analysts had expected claims to fall to 375,000. Claims in the week of June 2 hit 380,000, higher than originally estimated.

The report offset a Consumer Price Index report that showed prices in May fell 0.3%, the biggest drop since December 2008, thanks mostly to falling gasoline and food prices.

A market built on central-bank rescues?
The market's performance this week, with the Dow alternating between big losses and big gains, shows how stock prices are as much a function of government and central-bank actions as they are a function of sales and profits. The economies around the world have been struggling since the 2008-09 market crash and the Great Recession nearly toppled the global financial systems.

The financial sector of the world is still troubled. Just today, the Swiss National Bank told its two largest financial companies -- Credit Suisse (CS) and UBS (UBS) -- to raise more capital. Credit Suisse was off $1.87 to $17.97 in New York. UBS closed up 14 cents to $11.73 in New York.

While the U.S. economy has been in a recovery following its worst downturn since the Great Depression, the recovery has been slow and shallow. That's frustrated many accustomed to seeing gains turn up just by changing cells in a spreadsheet.

A big reason for the economy's slowness has been that real estate, normally a big driver of recoveries, may only be coming out of a depression this year. And a number of other industries are still trimming workforces.

If the Dow's performance is any indication, June is on track to be a more volatile month than May. There have been five days this month where the blue chips have been up or down more than 100 points 5 times, compared with 6 times for all of May. June 2011 may have been more volatile, with the Dow up or down more than 100 points on nine days.

Energy prices -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Crude oil (-CL)

$83.91

$82.62

-3.03%

-15.10%
(per barrel)











Heating oil (-HO)

$2.6278

$2.6109

-2.79%

-9.83%
(per gallon)











Natural gas (-NG)

$2.4950

$2.1850

3.01%

-16.53%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.6764

$2.6554

-1.70%

0.71%
(per gallon)











Brent crude 

$97.03

$97.13

-4.75%

-9.64%
(per barrel)











Retail gasoline

$3.5320

$3.5390

-2.43%

7.81%
(per gallon; AAA)












Crude oil moves up as OPEC leaves quota unchanged
Crude oil in New York rose 96 cents to $83.58 a barrel. Brent crude, however, was off 12 cents to $97.01 a barrel. The Organization of Petroleum Exporting Countries reportedly has agreed to keep its output quota unchanged at 30 million barrels a day. OPEC countries are currently producing something closer to 32 million barrels of crude a day.

Natural gas (-NG) was up 26.6 cents, or 10.9%, to $2.451 per million British thermal units after the Energy Department reported a much smaller domestic inventory gain than expected. Natural gas may have bottomed after falling to as low as $1.93 per million BTU in April. 

The national average price of gasoline dropped to $3.532 a gallon from Wednesday's $3.539, according to AAA's Daily Fuel Gauge Report. Today's average is off 10.3% from the peak price of $3.936 a gallon in early April and down 4.4% from a year ago. But drivers know things aren't that great. The price is still up 7.8% for the year.

Gold settled up 20 cents to $1,619.60 an ounce. Silver (-SI) dropped 53.4 cents to settle at $28.41 an ounce. Copper (-HG), however, closed up 1.5 cents to $3.3545 a pound.

Interest rates were higher, with the 10-year Treasury yield hitting 1.611%, up from 1.599% on Wednesday. The dollar lower against major currencies, especially the euro.

Travelers leads the Dow; Celgene tops the Nasdaq-100
Today's volatility still produced a big day for bulls. What's not clear is if there will be any momentum on Friday. Many investors will be looking to protect themselves against turmoil caused by the election in Greece as well as an election in France.

Twenty-eight of the 30 Dow stocks were higher, led by Travelers Companies (TRV), up $1.47 to $63.12; Home Depot (HD), up $1.19 to $52.16; Bank of America (BAC), up 16 cents to $7.66; and Walt Disney (DIS), up 95 cents to $47.18.

The laggards were Boeing (BA), down 21 cents to $71.85, and American Express (AXP), down 5 cents to $55.05.

A total of 401 S&P 500 stocks were higher, led by International Game Technology (IGT), up $1.90 to $15.12, and Cabot Oil & Gas (COG), up $2.78 to $35.04. The laggards were LSI Logic (LSI), down 27 cents to $6.19, and Qualcomm (QCOM), down $2.15 to $56.79.

A total of 67 Nasdaq-100 stocks were higher, with biotech company Celgene (CELG) the percentage leader, up $2.32 to $65.91. The laggard was Green Mountain Coffee Roasters (GMCR) on a report suggesting flagging sales for its Keurig coffee maker.

The big fuels for the Nasdaq-100 were gains for Intel (INTC), Microsoft (MSFT), Comcast (CMCSA) and Cisco Systems (CSCO).  (Microsoft is the publisher of MSN Money.)

Nokia to cut 10,000 jobs as profits sink
At the same time, Finnish mobile phone maker Nokia (NOK) announced today it was lowering profit guidance and cutting more than 10,000 jobs as it struggles to compete effectively against Apple's iPhone and phones using Google's (GOOG) Android operating system, including phones made by Samsung.

Shares fell 44 cents to $2.35 in New York.

Nokia said its phone business would post a deeper-than-expected loss in the second quarter due to tougher competition, which it expected to continue.

Once the world's dominant mobile phone provider, Nokia missed the rise of smartphones, and it is losing market share in cheaper, more basic phones.

Short hits from the markets -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.1000%

0.090%

42.86%

900.00%
5-year Treasury note 

0.720%

0.708%

7.30%

-13.25%
10-year Treasury note

1.611%

1.599%

1.90%

-13.90%
30-year Treasury bond

2.708%

2.711%

1.35%

-6.27%
Currencies











U.S. Dollar Index

81.988

82.057

-1.37%

1.82%
British pound

1.5562

1.5516

0.96%

0.16%
(in U.S. $)

 








U.S. $ in pounds

£0.643

£0.645

-0.96%

-0.16%
Euro in dollars

$1.26

$1.26

2.22%

-2.48%
(in U.S. $)

 








U.S. $ in euros

€ 0.791

€ 0.796

-2.18%

2.54%
U.S. $ in yen 

79.55

79.44

1.27%

3.18%
U.S. $ in Chinese

6.39

6.36

0.19%

1.06%
yuan











Canada dollar

$0.978

$0.972

0.98%

-0.32%
(in U.S. $)

 








U.S. dollar 

$1.023

$1.029

-0.97%

0.32%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,619.60

$1,619.40

3.54%

3.37%
(per troy ounce)

 








Copper (-HG)

$3.3545

$3.340

-0.33%

-2.37%
(per pound)

 








Silver (-SI)

$28.407

$28.9410

2.34%

1.76%
(per troy ounce)

 








Wheat (-ZW)

$6.2350

$6.1600

-3.15%

-4.48%
(per bushel)

 








Corn (-ZC)

$6.0150

$5.925

8.33%

-6.96%
(per bushel)

 








Cotton 

$0.7030

0.6926

-2.16%

-23.32%
(per pound)

 








Coffee

$1.5105

1.542

-7.30%

-34.23%
(per pound)

 








Crude oil (-CL)

$83.91

$82.62

-3.03%

-15.10%
(per barrel)










 

237Comments
Jun 14, 2012 12:56PM
avatar

Where are Jim, Tim, and Franklin now?

Just in case you might have wondered how their ineptitude affected their lives after they ruined so many dreams and lives.

Where are Jim, Tim and Franklin now?

Here's a quick look into the three former Fannie Mae executives who brought down Wall Street.  You may be surprised...

Franklin Raines - was a Chairman and Chief Executive Officer at Fannie Mae. Raines was forced to retire from his position with Fannie Mae when auditing discovered severe irregularities in Fannie Mae's accounting activities. Raines left with a "golden parachute" valued at $240 Million in benefits. The government filed suit against Raines when the depth of the accounting scandal became clear.

Tim Howard - was the Chief Financial Officer of Fannie Mae. Howard "was a strong internal proponent" of using accounting strategies that would ensure a "stable pattern of earnings" at Fannie. Investigations by federal regulators and the company's board of directors since concluded that management did manipulate 1998 earnings to trigger bonuses Raines and
Howard resigned under pressure in late 2004. Howard's Golden Parachute was estimated at $20 Million!

Jim Johnson - A former executive at Lehman Brothers and who was later forced from his position as Fannie Mae CEO. Investigators found that Fannie Mae had hidden a substantial amount of Johnson's 1998 compensation from the public, reporting that it was between $6 million and $7 million when it fact it was $21 million. Johnson is currently under investigation for taking illegal loans from Countrywide while serving as CEO of Fannie Mae. Johnson's Golden Parachute was estimated at

$28 Million.
********************​********************​********************​****************


Where are they now?


FRANKLIN RAINES?
Raines works for the Obama Campaign as his Chief Economic Advisor.

TIM HOWARD?
Howard is a Chief Economic Advisor to Obama under Franklin Raines.

JIM JOHNSON?
Johnson was hired as a Senior Obama Finance Advisor and was selected to run Obama's Vice Presidential Search Committee.

Kinda makes you sick to your stomach.


Are we stupid or what? Vote in 2012..it is the most important election of our lives...  You won't realize what they are doing until the US Constitution is destroyed and THEN some.



January 20th.............the end of an error.

Jun 14, 2012 12:56PM
avatar
Why do we continue to buy our own securities in these situations. It is no more than a stimulus. All it has proven to do is lower the value of our dollar and we have seen that this leads to higher oil prices. The Fed needs to stay out of it for now or at least until we can get a handle on our deficit. Also the stock market is no longer a true indication of how our economy is doing. It is being controlled by whim and speculation. Jobless claims rise, our economy is sluggish and there are still the same worries of a collapse of the euro.
Jun 14, 2012 4:02PM
avatar

Two things desperately need to happen in Washington.

 

1.  Some sort of term limits.  Why can the President only have 2 terms and these

other bozos can stay in for life if they keep pulling the wool over their constituents

eyes and raise enough money.

 

2.  Line item veto. 

Jun 14, 2012 3:09PM
avatar

More quantitative easing??? Are you kidding me??? How many times are we going to do this before we accept that IT DOES NOT WORK? The only thing more QE will accomplish is devaluation of the dollar and a huge economic burden for future generations. Monies from QE 1 & 2 are still laying around in accounts unused; and will likely remain there for decades. Can't these idiots come up with a more effective, meaningful solution? If your going to print billions more in soon-to-be worthless currency, give it directly to the American public so they can spend it on goods and services. That approach has a better chance of stimulating the economy.

Jun 14, 2012 3:14PM
avatar
All the news is bad..Spain, jobs, housing.  Yet stocks are surging?  Must be a final act of desperation on part of those wall street criminals.
Jun 14, 2012 12:51PM
avatar
The U.S. Civil War of 2013 is at hand. Get your red coats and blue coats on and get ready for a bloody Revolution. Another chapter of American history is in the making.
Jun 14, 2012 2:38PM
avatar

Hello, the economy will not improve until we stop outsourcing our work, and take care of our small businesses here not just medium, or big companies!!!

Jun 14, 2012 3:21PM
avatar

No more 'quantitative easing' it only makes our money worthless.

Get rid of the Fed. go back to the gold standard.

 

 

Jun 14, 2012 1:19PM
avatar
Where are food prices falling, as mentioned in the article?  I do not see it in GA.
Jun 14, 2012 3:21PM
avatar
"Stocks surge on hopes for more Fed aid
The Dow is up more than 100 points as traders hope for more 'quantitative easing.' Jobless claims move higher again. OPEC leaves quotas alone, and oil and natural gas push higher. Spanish bond yields nearly hit 7%."

The market has loss all integrity, it only seems to grow on hope. Look at the above two statements. WE need a reality check & balance. CHECK - Stocks should reflect their true market value based on business activity, BALANCE - interest rates that grow business and return a fair value to the lender. Without a fundamental return to reality this will go no and on until we go off the cliff. Some pain now is better than all pain all the time. 

Jun 14, 2012 2:36PM
avatar

If you ever need an idicator to show you how the DOW DOES NOT relect our economy, today is the perfect example!

 

Our economy "stumbles" yet again, and the DOW rockets upward anticipation another QE3, that will do little to create jobs.......

 

How many whacks at this pinata are we going to give Obama?  If you can't get over 300,000 jobs a month in the summer, how the hell are the winter months going to look when construction and road work slows?

Jun 14, 2012 1:30PM
avatar

So the first two didn't work, third time's a charm. Seems they really don't know what they're doing. Done before, twice, didn't work, do it again, it'll work? Since the stock and commodity markets have nothing to do with the real economy they'll need QE4 in September to keep the paper chase stabilized.

 

Peace

Jun 14, 2012 1:28PM
avatar

Are we really so stupid as to think a QE3 is the answer? Only the big investment companies and their employees benefit. You print more money to buy more of your own bonds. And this benefits who? Timed right all QE3 does is give the impression {short lived} that Pres Leroy is doing something right.  This is quite pathetic. It will only lead to QE4.

Jun 14, 2012 2:35PM
avatar

"Can anyone visualize what this economic disaster would have been like if the government

had not been here to bail, stimulate, and support the people that the private sector jettisoned

when the crash started in 2007?"


Who did they help? I helped myself because my government wasn't there for me. They helped pathetic people who had no business being helped. If we had just crashed. Wobbly things would have toppled and new things would have replaced them. We would be well on our way without complex financial crises dogging us--- still.

Jun 14, 2012 1:05PM
avatar
Last Time an ultra liberal claimed something was "fine" might have been Franks discussion of Freddie and Fannie status with the Bush WH
Jun 14, 2012 3:06PM
avatar
It is another sad day when stock prices surge with more bad news......Unemployment claims slowly  inching up to 400K higher that expected and last weeks claims was revised higher than expected.....Natural Gas reservers spiked higher but lower than expected....still bad news....Gasoline reserves still at all time high's....MORE COMPANIES announcing further Layoffs with Nokia at 10K off the payrolls by end of December leading the way , just in time for xMas holiday season. QE 3 is being talked about regulary now and the Recession word is being used more and more...Strap in because it is going to be a Rollercoster ride all the way down with CPI inflation and wage deflation leading the way.....! We are in reverse and shift knob just broke off...!
Jun 14, 2012 1:49PM
avatar
Free us from Obama in Nov. 2012, and the economy may take off.
Jun 14, 2012 4:07PM
avatar
"A pretty sad and pathetic day for America." = Every day that Obama is still the Catastrophe in Chief. 
 
Jun 14, 2012 12:51PM
avatar
what traders hope for is a steady stream of suckers reacting to phantom headlines designed to help them manipulate stock  prices. what a charade. the fact that too many folks are broke and can't afford conspicuous consumption does not seem to bother then at all. have we gotten to where we don't really need most Americans to participate in the economy in a meaningful way ?
Jun 14, 2012 12:56PM
avatar
Yeah, Wall Street traders want the Fed the rob everyone's savings via manufactured inflation so that they can make some short-term profits speculating on gold and commodities. Probably the Fed will fall for it, with Helicopter Ben at the helm. And I doubt that either of the Presidential candidates will replace Ben when they have a chance. Maybe if we all insist, but even then I doubt it.
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