Stocks rally on hopes for more stimulus

A rise in jobless claims and a dip in consumer prices spark speculation of further monetary easing from the Fed. The Spanish 10-year bond yield soars as contagion fears mount. Nokia will cut 10,000 jobs.

By TheStreet Staff Jun 14, 2012 9:05AM

TheStreetImage: Wall Street sign (© Corbis/SuperStock) Updated at 12:28 p.m. ET


By Andrea Tse


Stocks rose Thursday as new data on inflation and weekly unemployment claims renewed hopes for more economic stimulus from the Federal Reserve.

 

Investors also continued to keep a close eye on Europe, worrying that Greek general elections Sunday could lead to the country's exit from the euro and trigger disorder across the eurozone.

 

The Dow Jones Industrial Average ($INDU) was up 108 points at 12,605. The S&P 500 ($INX) was up 10 points at 1,325. The Nasdaq Composite Index ($COMPX) was up 18 points at 2,837.

 

The Labor Department on Thursday reported that U.S. initial jobless claims for the week ended June 9 rose to 386,000, up from the previous week's upwardly revised 380,000. Economists had predicted 375,000. The four-week moving average was 382,000, an increase of 3,500 from the previous week's 378,500. Continuing claims for the week ended June 2 were 3.278 million, a decrease of 33,000 from the preceding week's 3.311 million.

 

The Labor Department also reported that the consumer price index fell by 0.3% in May, matching expectations, with the core price index, excluding food and energy, rising 0.2%. Year over year, the CPI fell to 1.7% and the core CPI remained unchanged at 2.3%.

 

"The worse the numbers are in the U.S., the greater the pressure the Federal Reserve will have to increase their monetization plan," Chad Morganlander, a money manager at Stifel Nicolaus & Co., told Bloomberg. "There's a modest amount of optimism that the Greek vote will bode well for the markets. Investors are sitting on their hands waiting for Sunday’s vote."


Late Wednesday, Moody's downgraded Spain's debt rating to just a notch above junk, pending a review for another potential downgrade, citing the country's mounting debt burden, ailing economy and challenges tapping into the capital markets.

 

The downgrade follows Spain's request for a 100 billion-euro credit line from Europe to shore up its banking system. The Spanish 10-year bond yield topped 7%.

 

With Spanish contagion fears abounding and concerns that Italy will be the next eurozone country to request a bailout, Italy was able to raise its target 4.5 billion euros in a bond auction Thursday but at soaring borrowing costs.

 

In corporate news, Nokia (NOK) plans to cut 10,000 jobs globally and close plants by the end of 2013 in an effort to save costs. Nokia said Thursday it plans to close its core manufacturing plant in Finland and shut down other research and development projects.

 

The company also said its second-quarter loss from its smartphone business would be larger than expected. Nokia said it would record additional restructuring charges by the end of next year of about 1 billion euros.

 

Smithfield Foods (SFD), the meat processor, reported fourth-quarter earnings of $79.5 million, or 49 cents a share, down from year-earlier earnings of $98.4 million, or 59 cents.  Analysts had expected the company to post quarterly earnings of 53 cents a share. Sales rose 3% to $3.21 billion. Analysts were forecasting sales of $3.26 billion.

 

United Technologies (UTX) said its board approved an increase of 11.5% to the company's quarterly dividend, increasing it to 53.5 cents a share.

 

Costco (COST) is purchasing Controladora Comercial Mexicana's 50% stake in Costco de Mexico for about $760.4 million.

 

 

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247Comments
Jun 14, 2012 10:01AM
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It seems that the people in Europe like their Socialistic governments. They want the government to basically do everything for them. And it seems we are getting the same way here in the U.S.A.  It is no longer we the people but we the government.  And Wall Street is probably number one on the list of leeches that cause the government problems.  They want this bailout and that bailout just to give them comfort.  And yet when things don't go right, they are quick to point the finger at somebody else instead of looking at themselves in the mirror!  If Wall Street wants growth then you need to start with yourselves instead of wanting everybody else to hold your little hands!!!!!!!!!!!!
Jun 14, 2012 9:46AM
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Unemployment up, mounting debt crisis, dismal job growth, housing market in the tank but the market is up on "Hope" for another stimulus.  What a joke!
Jun 14, 2012 9:52AM
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Ugh...  Worse than the unemployment number was the fact that last weeks was adjusted up again, showing that this number is being consistently understated for obvious political reasons.  Watch next week as this number is revised upward.  Not a single downward revision all year?  Stop the lies.

Does anyone here want to buy some debt of Greece, Spain, Italy, Portugal, Ireland or France?   These governments cannot pay their bills, and the banks will collapse because of it.
These bonds have the FULL FAITH and CREDIT of each of their respective governments.  

What are the odds that the Euro zones debt bomb causes a complete collapse outside of Germany and England?

Mr. Obama, avoid the cliff here please.  STOP BORROWING, SPENDING and DEBASING!!!

Jun 14, 2012 10:22AM
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Our banking issues are systemic.  Capitalism depends upon the formation of private capital to be invested in sound business'.  This formation of capital is not easy, and hence demands a real rate of return.  What we have done is override this capital formation process by  having the FED create capital out of thin air.  

Banks do not need depositors, if they have the government giving them free money to lend.  The Fed is competing in the capital formation business with the printing press.   As long as this situtation is allowed to continue we are doomed to collapse.

Government control of our banking to means we will head into a depression caused by the FED.
Ron Paul looks to be correct, much as Ross Perot was about trade.
Jun 14, 2012 10:36AM
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Private sector is doing fine, according the Barack "Food Stamps" Obama. The misleading story here today says 6,000 more people on unemployment. The reported number last week was 377k. The reported number this week is 386k for a grand total difference of 9,000 more people unemployed this week compared to last week. This week's number will be silently revised higher (worse) before next week's report. C'mon, you folks in the media are no longer able to fool us with your rosy spin job!
Jun 14, 2012 10:31AM
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LOL, this is classic.  The recent econonic numbers are so terrible that insiders think more government welfare will somehow make things better?  INSANITY!!!  When this crap hits the fan there won't be nearly enough buckets to bail... and the vast majority of us will be covered in crap.  AVOID THIS MARKET because Dow 10,000 or less is ahead!
Jun 14, 2012 10:27AM
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>>>Ron Paul looks to be correct, much as Ross Perot was about trade.<<<<
 
 
yep!  yet guess what?  no one will listen to their ideas.  sad. 

 

 

Jun 14, 2012 10:19AM
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Funny, the link says "Stocks waver amid economic worries", and the headline of the article now says "Stocks rise amid economic data." Stock manipulation? I think so....
Jun 14, 2012 9:50AM
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Stocks bolstered by stimulus hope! More Bull S from MSN and FRAUD STREET !  Save the economy Helicopter Ben and the FED= OFF THE CLIFF WE GO !
Jun 14, 2012 10:11AM
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This is getting ugly, with almost no positive news to build on, why is the market up today? Is this just another round of pump and dump?

 

Bailing out Wall Street was the worse thing we could have ever done, and bailing out GM was the second worse. While it is true that Romney probably won't do much to change this fleecing, we have to start somewhere.

Jun 14, 2012 9:35AM
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For those of you who don't think the Fed is doing anything out of line, here's a bit from an article by David Fry at seekingalpha......

"A month after the U.S. Treasury sold $24 billion in 10 Year bonds at what was then a record low yield of 1.86%, the U.S. government once again approaches that mysterious primary dealer-repo nexus with the latest offer U.S. banks can't refuse: a $21 billion reopening. What is notable about today's auction is that in about 40 minutes, the auction will price at a record low yield of just about 1.63%, or 23 bps lower to the last record yield. Where things get patently surreal, however, is when one takes a look at today's POMO operation conducted by the Fed (remember those). Because as can be seen on the table below from the NY Fed, at 11 AM today, so precisely 2 hours before when the Treasury will complete its own sale, bought $4.8 billion of... wait for it... 10 Year bonds." (And, you thought QE and POMO were over probably.)


Two hours later the Treasury auctioned $21 billion in 10 year bonds at a yield of 1.622%. You can put 2 and 2 together, but this is the type of stuff which for the most part is done behind the curtain and away from the MSM and financial media more absorbed with Jaime Dimon. Call it what you will-three card Monte, Ponzi or just plain manipulation."



Jun 14, 2012 10:13AM
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We better get some good news in the next two weeks that Obamacare is struck down completely...  If it is upheld, I bet the market will collapse at least 1500 points...

We are probably already entering a double dip, but this will be far worse....  Have we ever had a recession followed with a depression?
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MAY DAY MAY DAY

 

Sell Sell Sell folks

 

The economy is back into a recession and the firing of Americans has started all over again.

 

This time it will be worse as the government and the Federal Reserve are out of bullets.

 

Ireland has to be bailed out again it is asking the IMF for a huge amount of monies.

 

Spain has collapsed and Greece is well on the way out of the EU.

 

If they rig the election in Greece and keep in the austerity party Athens will go up in smoke as the people revolt in a civial war.

 

Pretty much Italy is following in Spain's foot steps just weeks behind. And France is having a very hard time with it's bills as it is also in a recession.

 

SELL SELL SELL people the crash is here now.

Jun 14, 2012 9:59AM
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I agree TruthSeeker - I always find it puzzling that the market rises when there is another stimulus.  Wouldn't the fact that the economy is struggling so bad that there needs to be another stimulus be the main economic factor in that scenario?  And you would think that the fact that a struggling economy needs more stimulus would cause the market to fall.  But alas, that is not the case because the market operates on a day trader basis and not on a long term investment basis like it did way back when.  And that fact is scarier - there is no more long-term investment in any company or economy - and that is simply not sustainable.  Where are we going? 
Jun 14, 2012 10:46AM
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"Stocks turned higher after a weak open Thursday as new data on inflation and weekly unemployment claims renewed hopes for more economic stimulus from the Federal Reserve." The stock market manipulators are pinning their "hope" on an ever worsening economy being the impetus for a freebie handout from the government courtesy of Joe Schmoe's tax payments. These a-holes are getting rich by peddling "Hope" to drive up the market today knowing there will be no "Change" and it will drop tomorrow.

Jun 14, 2012 10:04AM
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Wall Street you are cut off!!!!!!!!!!!! Will be excited when I read that headline!!!!!!!!!!!!!
Jun 14, 2012 10:47AM
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Alright .... let's spend more money that we don't have. At this point, it is senselesss to think that we can pay back our debts. So, let's just run them higher and higher. Then we can claim bancruptcy, the dollar will devalue again. We can sell more stuff to China and soon we'll be using the Yen and everyone will be in Chinese language classes. Probably a great business venture. "Learn Chinese ... just $999.00"

 

Way to go Barry. In four years, you've totally screwed up everything that this country has stood for for the last 300 years......

Jun 14, 2012 11:12AM
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Nobody should be surprised at what is happening.  We all knew this was gonna hurt.  We have all talked about it here for the last year. How much more dumb money can they throw away? Answer, Until they are all run out of their offices in DC and no sooner. They won't leave until they are ridiculed and scorned and then some still won't.  It is like the car teetering on the cliff and the driver is still grasping onto the wheel with white knuckles, unable to exit or even think of an alternative!  Rank Amateurs.  I still can't get past that creepy Obama sitting on the couch on the view with his hands folded and legs crossed just like all the women.  A politician through and through.  We gotta huge problem folks.  Fear will now come over this country like we have never seen before    JMHO.
Jun 14, 2012 9:24AM
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foreclosures/unemployment....................this article just now catching up with the REAL world....LOL
Jun 14, 2012 10:35AM
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Ron Paul might just be Romney's suggestion for Fed Chairmen once he fires Bernanke.....
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