Dow up 26 points as financial, energy stocks gain
The S&P 500 and Nasdaq see their first 2-day gains in a month as the ISM Services Index moves higher. European stocks are stable. Facebook drops again. Starbucks wants to upgrade its food quality. The Fed thinks about more stimulus.
Stocks finished higher Tuesday, with the Dow Jones industrials ($INDU) breaking a four-day losing streak, as investors shrugged off worries about the European debt crisis and cheered a better-than-expected report on the services economy.
The rally was fueled by gains for financial and energy stocks, which were the weakest sectors of the market in May and in the past week. The Nasdaq Composite Index ($COMPX) and the Standard & Poor's 500 Index ($COMPX) enjoyed their first two-day winning streaks in a bit more than a month.
JPMorgan Chase (JPM) and Bank of America (BAC) were the top and third-best performers among the 30 Dow stocks. Citigroup (C), investment bank Morgan Stanley (MS), futures exchange operator Intercontinental Exchange (ICE) and insurance-giant American International Group (AIG) were among the top 14 S&P 500 performers. Oil-and-gas driller Noble Industries (RDC) was 13th-best in the S&P 500. Homebuilders were stronger, but Facebook (FB) fell below $26 for the first time, finishing down $1.03 to at $25.87 after an early rally fizzled.
Finance ministers from the G-7 nations held a conference call on what to do about crises in Greece and Spain, pledging to coordinate their efforts. Spain's IBEX 35 Index ($ES:IB) gained 28 points to 6,268 on the day even as Spain's budget minister said the government has effectively lost access to capital markets because of steep risk premiums demanded by bond investors.
The Dow closed up 26 points to 12,128. The S&P 500 added 7 points to 1,286, and the Nasdaq finished up 18 points to 2,778. The Nasdaq was up for the second day in a row for the first time since May 1-2. The S&P 500 enjoyed its first two-day gain since April 26-27.
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The Nasdaq-100 Index ($NDX), meanwhile, was up 9 points to 2,488. The Nasdaq-100 is normally heavily influenced by Apple (AAPL). But Apple was off $1.46 to $562.83. The real strength in the index Tuesday came from gains in Oracle (ORCL), Qualcomm (QCOM) and Intel (INTC).
With Tuesday's close, the Dow was still 1.1% below its simple 200-day moving average. But the S&P 500 was just about at its 200-day average, with the Nasdaq trading 0.6% above the average. The moving average is an important barometer of investor confidence.
What's not clear is if the market is bottoming or waiting for the June 17 election in Greece, which may determine if the nation remains a eurozone country. If Greece leaves the eurozone, stocks could really slump. Standard & Poor's suggested Monday the odds could be 1 in 3.
Futures trading at 3 a.m. ET suggests stocks will open solidly higher on Wednesday with the Dow poised for a 60-point gain at the open.
Is the Fed planning to stimulate?
Wednesday's market may be moved by the European Central Bank's interest-rate discussion, due before the market open; a Commerce Department report on productivity and wage growth; and the Federal Reserve's Beige Book report, due at 2 p.m. ET.
The Beige Book report, a narrative description of the economy as of late May, is the first of two important Fed events this week. The second is Chairman Ben Bernanke's testimony to Congress' Joint Economic Committee on Thursday.
Investors will study the Beige Book for signs of stress. And they will listen keenly to any Bernanke hints on Thursday that the Fed may engage in a new move to boost the economy.
Apparently, Fed officials are at least thinking about more stimulus, The Wall Street Journal reported late Tuesday. That's in contrast to April when they clearly signaled they was in no mood to do anything unless the economy shows serious signs of deterioration. While a number of Fed officials believe more aid is needed, other members of the Federal Open Market Committee, the Fed's interest-rate-making body, have been openly hostile to any new stimulus.
The Fed has cut interest rates nearly to zero, and it has been buying long-term Treasury securities and reinvesting maturing securities to ensure the economy has enough cash to fund expansion. The results have boosted profits, but the economy has been slow to respond.
The question now is whether a series of disappointing economic reports over the past few weeks -- especially Friday's jobs report that only 69,000 new jobs were created in May -- are evidence enough that the economy needs help now.
As important important would be the tools the Fed might employ. The Journal report was exceedingly vague on this point, leaving one to believe that FOMC officials are only beginning to think through the problem.
Homebuilder Hovnanian Enterprises (HOV) and resort operator Vail Resorts (VAIL) report quarterly results on Wednesday.
An OK report on ISM Non-Manufacturing Index
The one decent piece of U.S. economic news was the Institute for Supply Management's Non-Manufacturing Index, which rose slightly to 53.7. A reading above 50 is a signal of an expanding economy.
As welcome as the gain was, the underlying pieces of it were mixed, said economist Paul Edelstein of IHS Global Insight.
Business activity and new orders gained. But supplier deliveries sped up, and employment softened. Prices paid for raw materials fell slightly.
"The employment index is consistent with monthly gains in private-services payrolls of around 100,000, which is about what we got in May," wrote Paul Ashworth, chief U.S. economist with Capital Economics, a British economic consulting firm. "Overall, small comfort, but it is clear that the U.S. economy is far from immune to the global slowdown."
|Energy prices -- New York close|
|Tues.||Mon.||Month chg.||YTD chg.|
|Crude oil (-CL)||$84.29||$83.98||-2.59%||-14.71%|
|Heating oil (-HO)||$2.6336||$2.6269||-2.57%||-9.63%|
|Natural gas (-NG)||$2.4460||$2.4150||0.99%||-18.17%|
|(per mil. BTU)|
|Unleaded gasoline (-RB)||$2.6847||$2.6707||-1.40%||1.03%|
|(per gallon; AAA)|
Crude oil and gold move higher
Crude oil (-CL) was up 34 cents to $84.32 a barrel. Brent crude was flat at $98.84.
Gold (-GC) settled up $3 to $1,616.90 an ounce. Silver (-SI) settled with a gain of 39.8 cents to $28.405 an ounce. Copper (-HG) slipped 1.8 cents to $3.289 a pound.
Interest rates were higher, with the 10-year Treasury yield rising to 1.556% from 1.527% on Monday. The dollar was higher against the euro and other currencies.
Homebuilders rise on ISM report
Even if it was small comfort to economists, the ISM report did help boost homebuilding stocks. Lennar (LEN) and PulteGroup (PHM) were the top two performers among S&P 500 stocks. Lennar had fallen 19% between May 16 and Monday.
Starbucks (SBUX) fell $1.49 to $52.41 a day after announcing ambitious plans to buy a small California bakery chain and remake its food offerings to compete more effectively with other companies that offer stronger food menus, such as Panera Bread (PNRA).
Panera was up 47 cents to $140.69 after falling to as low as $136.97.
Dollar General (DG) fell $1.73 to $46.76 after announcing late Monday that top executives and investors would sell some of their stock.
Netflix move on content delivery hits Limelight and Akamai
Shares of content delivery companies Limelight Networks (LLNW) and Akamai Technologies (AKAM) both tumbled early in the session after Netflix (NFLX) said it is shifting more video streaming traffic to its own content delivery network.
Limelight ended at $2.36, down 34 cents. Akamai finished down 92 cents to $27.44. The companies build networks and software that compresses video files for massive streaming over the Internet.
Netflix was down 17 cents to $64.83.
A nice day for bulls
Seventeen of the 30 Dow stocks were higher. While JPMorgan Chase and Bank of America were the leaders, followed by Hewlett-Packard (HPQ), the laggards were United Technologies (UTX) and Wal-Mart Stores (WMT).
About 390 S&P 500 stocks were higher. Chipmaker SanDisk (SNDK) was the index's third-best performer after Lennar and Pulte Group. The laggards were tool-and-fastener dealer Fastenal (FAST) and industrial-supplies distributor W.W. Grainger (GWW).
Meanwhile, 67 Nasdaq-100 stocks were higher, led by SanDisk, NetApp (NTAP) and Micron Technology (MU). The laggards were Fastenal and Akamai.
|Short hits from the markets -- New York close|
|Tues.||Mon.||Month chg.||YTD chg.|
|13-week Treasury bill||0.0800%||0.070%||14.29%||700.00%|
|5-year Treasury note||0.670%||0.681%||-0.15%||-19.28%|
|10-year Treasury note||1.556%||1.527%||-1.58%||-16.84%|
|30-year Treasury bond||2.619%||2.571%||-1.98%||-9.35%|
|U.S. Dollar Index||82.913||82.661||-0.26%||2.97%|
|(in U.S. $)|
|U.S. $ in pounds||£0.650||£0.650||0.18%||0.99%|
|Euro in dollars||$1.25||$1.25||0.82%||-3.81%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.802||€ 0.800||-0.82%||3.96%|
|U.S. $ in yen||78.80||78.49||0.32%||2.21%|
|U.S. $ in Chinese||6.39||6.39||0.12%||1.00%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
|Crude oil (-CL)||$84.29||$83.98||-2.59%||-14.71%|
Looks like Bendover is dumping a little Operation Twister money into the market to keep from losing another day. The Banks and Wall Street are just praying to see QE on Bernanke's lips ( or his zipper).
Markets will probably rally a couple of times in June until the Twister program ends so sell into the rallys and store some cash. In August or September Bendover Bernanke will get with the Fed and devise another QE program to get the market back up like in 2010. Once the presses start rolling again gasoline and food prices will sky rocket above last winters levels. Gasoline will stay above the $3.00 level as the new low and approach $5.00 next Spring as long as the Banks are allowed to control the markets via the Federal Reserve. Until we get rid of the Fed, reinstate Glass-Steagle and control personal as well as government spending this runaway train will continue until the unfortunate end.
JP Morgan Chase and Bank of America TOP PERFORMERS= RAPE,PILLAGE AND PLUNDER THE AMERICAN MIDDLE CLASS ! The (TBTF) Criminal Banking Cartel is alive and well ! God Bless America !
O.K. So , a bunch of people who can't clean up their own financial messes get together to come up with a plan to fix other peoples messes. Yeah right. I don't think I'll hold my breath waiting for an amazing plan to emerge here.
Our banking system along with Wall St needs a major overhaul and iron clad regulations that are monitored on a regular basis and enforced...no exceptions!!
"The one decent piece of U.S. economic news was the Institute for Supply Management's Non-Manufacturing Index, which rose slightly to 53.7. A reading above 50 is a signal of an expanding economy."
Great...service related and retail jobs both of which are low paying, usually part-time, no benefits etc. are up. Plus the ISM report is probably nothing more than lies anyway and most people don't even know what it means or could care less. This type of "journalism" is disgraceful considering all the more relevant events shaping the globabl economy but it is so typical of the Street Staff trying to put a positive spin on negative news.
The point is they'll NEVER run out of ink!! You see ,that's the evil genius of their plan, they don't need ink because pssssst don't tell anybody but (insert insane giggling here) IT'S VIRTUAL MONEY THAT DOESN'T REALLY EXIST!!!!!! How cool is that! Magic Money WHEEEEEEEEEEEEE.
Actually, nobody owes you anything! The sooner people (and politicians) begin to understand this, the sooner the world economy will recover. Around the world, Capitalism is working just fine. There are a lot of producers and consumers out there willing to engage in free and open commerce. The problem is government, and government intervention. The government takes a piece of every commercial transaction and then does probably one of the worse things with the money – redistributes it (in many inefficient and ineffective ways) to people who did not earn it. In other words, they eliminate the naturally occurring relationship between producer and consumer. This entitlement mentality is the cancer undermining the entire system and until we deal with that, no recovery will ever take place.
"European Stocks Are Stable"
Oh really? Says who? Just another example of poor journalism on the part of the Stree Staff.
Another day at the office. Have an absolutely lack-luster trading day and somebody will find a way to glorify it. Have a profit taking sell-off and somebody will find a way to blame Obama.
The DOW has been hovering around 12K for a year. Get over yourselves on these irrelevant market fluctuations and let's get working on the private sector creating jobs.
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[BRIEFING.COM] The S&P 500 trades flat with one hour remaining in the session. It has been a busy day on the economic front with the release of the GDP report for the second quarter and the latest policy statement from the Fed.
Tomorrow's session will also feature a handful of data points, but neither weekly initial claims (Briefing.com consensus 310K) nor the Chicago PMI report (consensus 61.8) are expected to be met with a noteworthy reaction.
However, on Friday, the ... More
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