Stocks finish at 2-month highs

Updated: 8:52 p.m. ET

Stocks finished a holiday-shortened day at their best levels in two months in a rally built on geopolitical worries.

Fears that Iran might block the Strait of Hormuz briefly pushed crude crude oil (-CL) above $88 a barrel in New York. Brent, the benchmark North Sea crude oil, passed $100 for the first time since June 6. Gold (-GC) also moved higher.

The crude surge set off a big rally in oil- and gas-production stocks and oil-services stocks. The energy sector of the Standard & Poor's 500 Index ($INX) was up more than 2.5% and was the top-performing sector of the index.

 

Markets are closed Wednesday for the July 4 holiday.

Oil's gains came as auto sales for June were better than expected, with Chrysler, General Motors (GM) and Ford Motor (F) all beating expectations. Toyota (TM) sales missed estimates but were up more than 60% from a year ago. Meanwhile, factory orders in May were better than expected, cheering many investors worried that manufacturing was softening.

The Dow Jones industrials ($INDU) closed up 72 points to 12,944, close to their high on the day. The S&P 500 gained 9 points to 1,374, and the Nasdaq Composite Index ($COMPX) rose 25 points to 2,976. The Dow's close was its best since May 7. The S&P and Nasdaq had their best finishes since May 3.

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The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, gained 21 points to 2,646, its best finish since May 13. The index was led by gains in Netflix (NFLX), Micron Technologies (MU) and Green Mountain Coffee Roasters (GMCR). Apple (AAPL), the biggest influence on the index, rose $6.89 to $599.41, contributing 5.8 points to the gain.

U.S. stock markets closed at 1 p.m. ET. Futures markets were scheduled for a normal day of trading. Markets will operate normally on Thursday.

Tensions rise in the Persian Gulf region
Crude oil settled at $87.66 a barrel in New York, up $3.91, or 4.7%, on the day. Brent crude was up $3.27 to $100.61 a barrel at 3 p.m. ET; it had traded as high as $101.58.

Light sweet crude, the benchmark U.S. crude, is up 12.8% since Thursday's close of $77.69 a barrel. Brent is up 12.8% since hitting a bottom on June 21.

The Strait of Hormuz is the narrow pass through which oil tankers must travel to leave the Persian Gulf. Some 20% of the world's crude oil passes through it. To block the pass would cause major disruptions in the world's oil markets.

The tensions are rising because of Western efforts to get Iran to halt its nuclear development program. Western nations are imposing sanctions on Iranian crude.

The United States was reported to have significantly increased its military presence in the Persian Gulf region, The Guardian newspaper in London reported. The U.S. doubled the number of its minesweepers while bringing in stealth warplanes, in part as a deterrent to any Iranian attempt to close the strait.

In a war-games exercise, Iran test-fired medium-range missiles capable of hitting US bases in the region or Israel. The Iranian parliament called an urgent debate on a bill to block at least some oil tankers in the Gulf, and there were reports that the leadership might be considering announcing a new, higher level of uranium enrichment.

Energy shares surged with crude. Chevron (CVX) was up $1.51 to $107.37. Exxon Mobil (XOM) added 94 cents to $86.28. Anadarko Petroleum (APC) rose $3.39 to $69.05.

Gold settled up $24.10 to $1,621.80 an ounce, a two-week high. Freeport-McMoRan Copper & Gold (FCX) was up $1.33 to $35.21. Newmont Mining (NEM) added $1.24 to $49.73.

Silver (-SI) climbed 78 cents to $28.28 an ounce. Copper (-HG) rose 7.1 cents to $3.54 a pound.

Energy prices -- New York close
			Tues.			Mon.			Month chg.			YTD chg.
Crude oil (-CL)			$87.66			$83.75			3.18%			-11.30%
(per barrel)
Heating oil (-HO)			$2.7585			$2.6759			1.79%			-5.34%
(per gallon)
Natural gas (-NG)			$2.8990			$2.8240			2.66%			-3.01%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.7229			$2.6239			3.46%			2.46%
(per gallon)
Brent crude			$100.68			$97.34			2.94%			-6.24%
(per barrel)
Retail gasoline			$3.3290			$3.3260			-0.72%			1.62%
(per gallon; AAA)

Factory orders rebound
Orders placed with U.S. factories rose in May for the first time in three months, easing concern that manufacturing is faltering. The 0.7% increase in bookings followed a revised 0.7% drop in April, the Commerce Department said.

Outside of primary metals (down by 1.8% and likely reflecting price effects) and weakness in computers and electronics (-0.1%), there were broad increases in orders across the board in May, Nomura Securities noted, but that comes after two straight months of broad-based weakness in orders across many categories.

A decent month for auto sales
General Motors and Chrysler reported double-digit sales of new vehicles in June as the auto industry was helped by lower gas prices and steady demand. Ford sales were up 7%. Most other manufacturers also reported higher U.S. sales.

The industry was sold vehicles at a seasonally-adjusted annual rate of 14.1 million units, up 2.2% from May's sales rate of 13.78 million units and up 21.8% from June 2011's rate of 11.56 million units. It was fifth month out of six so far in 2012 that the sales rate has been above 14 million units.

The automakers reported total sales for the month of 1.29 million units, up from 1.05 million units in June 2011 and 1.33 million units in May 2012.

The gains will be offset by lower sales in Europe. Ford and GM have already warned that their European operations are likely to show sizable second-quarter loses.

GM said today that its sales in the United States increased 15.5% during the month to 248,000 vehicles, which the company said was its best monthly performance in nearly four years.

Chrysler reported a 20% increase over the previous year, marking its best June sales since 2007. Ford said its June sales rose 7%, with sport utility vehicles and trucks leading the way.

The results beat analysts’ expectations, as the overall auto industry continued its methodical recovery from the recession.

Toyota's big sales gain was distorted by the 2011 Japanese earthquake and tsunami that disrupted the manufacturing of auto parts.

Volkswagen sales were up 28.7%

Stocks of all the automakers were higher.

If there was a downside, it came in heavy trucks reported by Ford and GM. The total was 555 in June, down from 568 in May and 722 a year ago. Heavy truck sales for the companies this year peaked in April with 692 deliveries. Some of that decline, CNBC's Jim Cramer suggested earlier this week, may be to a slowdown in oil-and-gas drilling this spring.

LIBOR scandal claims a big victim
The market's gains overshadowed the growing banking scandal in Britain over manipulation of interest rates.

Robert Diamond, the CEO of Barclay's (BCS), Britain's largest bank, resigned as the implications of a global probe into bid-rigging involving the London Interbank Offering Rate grew. Jerry del Missier, named chief operating officer only last month, also stepped down.

The scandal involves traders from at least 12 other global banks agreeing to manipulate the LIBOR rate. This is the benchmark rate that banks use to lend money to each other and is used to price everything from credit card rates to complex financial derivatives. Calculated daily, it depends on information supplied by banks. But Barclay's traders were able to manipulate the data to boost the bank's profits.

Barclay's American Depositary Units (ADR) were off 23 cents to $10.54 in New York.

JPMorgan shares drop; market shrugs off Microsoft write-off
JPMorgan Chase (JPM) shares fell 10 cents to $35.88 after influential analyst Meredith Whitney downgraded the stock to "hold" from "outperform."

The stock has been pummeled after the banking giant revealed a trading loss in May estimated at $2 billion. Many analysts peg the loss at considerably more than $2 billion, probably around $4 billion. JPMorgan releases its second-quarter earnings release on July 13 and is expected to offer more details about the problem.

Traders shrugged off Microsoft's (MSFT) announcement late Monday that it was writing off virtually all of its $6.3 billion purchase of aQuantive, a Web marketing company. Shares were up 20 cents to $30.65. (Microsoft publishes MSN Money.)

Facebook (FB) shares were up 43 cents to $31.20 after two days of declines. One potential reason for the gain was news that General Motors may advertise on Facebook again. The companies have traded thoughts on how GM could get better results from ads on Facebook.

Short hits from the markets -- New York close
			Tues.			Mon.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0800%			0.070%			0.00%			700.00%
5-year Treasury note			0.697%			0.669%			-4.39%			-16.02%
10-year Treasury note			1.631%			1.580%			-1.69%			-12.83%
30-year Treasury bond			2.744%			2.683%			-0.69%			-5.02%
Currencies
U.S. Dollar Index			81.872			82.008			-1.37%			1.68%
British pound			1.5699			1.5699			-0.03%			1.04%
(in U.S. $)
U.S. $ in pounds			£0.637			£0.637			0.03%			-1.03%
Euro in dollars			$1.26			$1.26			-0.50%			-2.65%
(in U.S. $)
U.S. $ in euros			€ 0.793			€ 0.794			0.51%			2.72%
U.S. $ in yen			80.00			79.52			0.10%			3.76%
U.S. $ in Chinese			6.37			6.34			0.38%			0.76%
yuan
Canada dollar			$0.988			$0.984			0.35%			0.71%
(in U.S. $)
U.S. dollar			$1.013			$1.016			-0.27%			-0.70%
(in Canadian $)
Commodities
Gold (-GC)			$1,621.80			$1,597.70			1.10%			3.51%
(per troy ounce)
Copper (-HG)			$3.540			$3.469			1.24%			3.03%
(per pound)
Silver (-SI)			$28.2800			$27.4990			2.42%			1.31%
(per troy ounce)
Wheat (-ZW)			$7.9925			$7.7250			5.55%			22.44%
(per bushel)
Corn (-ZC)			$6.7450			$6.558			6.26%			4.33%
(per bushel)
Cotton			$0.7260			0.7202			1.78%			-20.81%
(per pound)
Coffee			$1.8045			1.746			5.71%			-21.42%
(per pound)
Crude oil (-CL)			$87.66			$83.75			3.18%			-11.30%
(per barrel)