Stocks hit 3-month highs on European bullishness

The Dow gains 21 points as traders start to see hope for the region's debt crisis and as Spanish bond yields fall. The S&P 500 nearly hits 1,400. Best Buy's founder wants to take the company private. Oil and gold are higher.

By Charley Blaine Aug 6, 2012 12:54PM
Charley BlaineUpdated at 7:30 p.m. ET

Stocks finished at their highest levels since early May, although the rally lost steam in the last half-hour of trading. The catalyst was growing investor hope that Europe may be starting to inch its way toward a solution to its debt crisis.

The Standard & Poor's 500 Index ($INX) nearly reached 1,400 and the Nasdaq Composite Index ($COMPX) briefly topped 3,000, both for the first time since early May. Shares of U.S. companies with sizable sales in Europe moved higher, including IBM (IBM), Cisco Systems (CSCO), Caterpillar (CAT) and United Technologies (UTX).

Best Buy
(BBY) shares were up sharply after founder Richard Schulze offered to take the struggling electronics retailer private for $24 to $26 a share -- or as much as $8.84 billion. Best Buy rose as high as $21.60 before falling back to $19.99, up $2.35. The pullback was related to caution over whether a deal can get done.

Knight Capital Group's (KCG) shares were off 98 cents to $3.07 after the company, one of the largest market makers for stocks, announced a $400 million capital injection. The move diluted existing shareholders' stake in the company to just 25%. The company was facing a loss of some $440 million after a computer software glitch last week sent thousands of orders to buy and sell stocks to the major exchanges.

The Dow Jones industrials ($INDU) closed up 21 points to 13,118. The blue chips hit 13,187, their highest intraday level since May 4. The S&P 500 gained 3 points at 1,394 after reaching as high as 1,399.63. The Nasdaq added 22 points to 2,990.

Article continues below.
The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, gained 18 points to 2,694. Apple (AAPL), the largest influence on the index, was up $6.85 to $622.55.

The major averages scored their first positive finishes on a Monday since the end of May.

The market's positive finish came after last week's small weekly gain, which was predicated on a stronger-than-expected jobs report on Friday and renewed hopes for Europe. The market's pullback looks to have been the result of sell programs kicking in when the S&P 500 hit 1,400 and the Nasdaq hit 3,000.

On Tuesday, the Federal Reserve will report on consumer credit outstanding from the Federal Reserve. Earnings results are due from apparel retailer Fossil (FOSL), beer-maker Molson Coors Brewing (TAP), real-estate research firm Zillow (Z) and entertainment giant Walt Disney (DIS).

Futures trading suggests a flat open on Tuesday.

Energy prices -- New York close



Mon.

Fri.

Month chg.

YTD chg.
Crude oil (-CL)

$92.20

$91.40

8.52%

-6.71%
(per barrel)











Heating oil (-HO)

$2.9409

$2.9261

8.52%

0.92%
(per gallon)











Natural gas (-NG)

$2.9080

$2.8770

2.97%

-2.71%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.9222

$2.9310

11.03%

9.96%
(per gallon)











Brent crude 

$109.55

$108.94

12.01%

2.02%
(per barrel)











Retail gasoline

$3.6190

$3.6100

8.45%

10.47%
(per gallon; AAA)












Gold and crude move higher
Gold (-GC) settled up $6.90 to $1,616.20 an ounce. It's up slightly this month. Crude oil (-CL) was up 80 cents to $92.20 a barrel. Brent crude rose 30 cents to $109.57 a barrel.

The gains came on the European hopes, which boosted the euro to $1.241 against the dollar, up from $1.2399 on Friday. The dollar, however, is still up 4.5% against the euro this year.

The national average price of gasoline was $3.619 a gallon, according to AAA's Daily Fuel Gauge Report, up from Sunday's $3.61 a gallon and up 8.1% from the July 2 low of $3.326 a gallon.

The 10-year Treasury yield was down slightly to 1.542% from Friday's 1.577%.

Europe looks better
Stocks in Germany, France and Britain were higher for the second straight session as traders appeared more optimistic about European Central Bank President Mario Draghi's plan to address the sovereign debt crisis.

Draghi seems to be succeeding at getting most of the eurozone countries to buy into his plan, which still requires a large number of approvals.

Draghi said Thursday that any future debt purchases by the central bank would focus on short-dated debt. That led to sharp declines in Spanish and Italian bond yields Friday and today.

Spanish and Italian two-year notes climbed for a fourth day amid speculation that the European Central Bank will buy the securities in an attempt to calm regional turmoil. The yield on the two-year Spanish note has fallen from a high of 6.64% on July 24 to 3.493% today.

Schulze's Best Buy offer appears to lack details
Schulze's $24-to $26-a-share offer for Best Buy represents a premium of 36% to 47% to Best Buy's closing price Friday. Best Buy had 339.9 million shares outstanding as of June 6. Schulze, who founded the company 36 years ago, owns about 20% of its stock.

Schulze's offer came as the company has struggled against competition from Apple's stores, Amazon.com (AMZN) and other retailers. Schulze said his offer to take the company private would allow the company time to fix its problems. "There is no question that now is the moment of truth for Best Buy and that immediate and substantial changes are needed for the company to return to its market-leading ways," he said in a statement.

But the offer faces important hurdles:
  • It not clear whether he can raise the cash needed to take the company.
  • It's not clear whether Best Buy will give him clearance to form an investment group to make an offer, a legal requirement in Minnesota, where the company is based.
Best Buy has struggled with management turmoil that prompted Brian Dunn to resign as the CEO earlier this year. A board report, The Wall Street Journal noted, found that Dunn had engaged in an "extremely close personal relationship" with a subordinate that "negatively impacted the work environment," according to the company's board. 

The company said it has received the offer, which it termed "highly conditional," and will review it.

HCA and Tyson Foods shares fall
HCA Holdings (HCA), the biggest U.S. hospital operator, declined the most in eight months after saying its cardiology practices had come under scrutiny from the U.S. Attorney’s Office in Miami.

HCA fell $1.05 to $25.55 after hitting as low as $23.91 in its biggest intraday drop since Dec. 2. The U.S. Attorney in July asked HCA for information about the “medical necessity” of interventional cardiology procedures at its hospitals, the company said.

At the same time, CEO Richard Bracken said today on a call that The New York Times was also preparing a story that may focus on HCA’s medical practices and treatment of uninsured patients.

Meat producer Tyson Foods (TSN) shares fell $1.23 to $14.17 after the company cut its full-year revenue forecast by $1 billion to $33 billion. The company warned that full-year profits would miss the company's expectations and remain under pressure next year.

Tyson said fiscal-third-quarter earnings fell to 50 cents a share compared with 51 cents a year ago. Wall Street had been looking for 54 cents a share. At $8.31 billion, revenue also fell short of analysts' $8.72 billion projection.

Cognizant Technology has strong earnings
Cognizant Technology Solutions
(CTSH) climbed $6.35 to $64.21. The provider of consulting and outsourcing services reported earnings and sales that beat analysts' projections.

Shares of Warren Buffett’s Berkshire Hathaway were lower even as the company's second-quarter profit beat estimates. The company's Class A (BRK.A) shares were down $690 to $127,789. The Class B (BRK.B) shares were off 43 cents to $85.15.

Regions Financial (RF) added 7 cents to $7 after analysts at Bank of America/Merrill Lynch raised their recommendation to "buy" from "neutral."

Sixteen of the 30 Dow stocks were higher, led by Bank of America (BAC), Hewlett-Packard (HPQ) and Cisco Systems (CSCO). The laggard was American Express (AXP).

Best Buy, First Solar (FSLR) and Cognizant Technologies were the S&P 500 leaders. Tyson Foods and advertising company Interpublic Group (IPG) were the laggards.  A total of 285 S&P 500 stocks were higher.

Cognizant and Netflix (NFLX) were the Nasdaq-100 leaders. Warner Chilcott (WCRX) and chip maker Marvell Technologies (MRVL) were the laggards. Seventy-nine stocks in the index were higher.
 
Short hits from the markets -- New York close



Mon.

Fri.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0800%

0.090%

-20.00%

700.00%
5-year Treasury note 

0.647%

0.674%

8.01%

-22.05%
10-year Treasury note

1.558%

1.577%

-6.09%

-16.73%
30-year Treasury bond

2.646%

2.662%

-4.23%

-8.41%
Currencies











U.S. Dollar Index

82.302

82.446

0.67%

2.21%
British pound

1.5627

1.5645

-0.48%

0.58%
(in U.S. $)

 








U.S. $ in pounds

£0.640

£0.639

0.49%

-0.57%
Euro in dollars

$1.24

$1.24

-1.65%

-4.18%
(in U.S. $)

 








U.S. $ in euros

€ 0.805

€ 0.806

1.68%

4.37%
U.S. $ in yen 

78.37

78.61

-1.72%

1.65%
U.S. $ in Chinese

6.40

6.37

0.37%

1.11%
yuan











Canada dollar

$1.002

$0.999

1.95%

2.10%
(in U.S. $)

 








U.S. dollar 

$0.999

$1.001

-1.91%

-2.06%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,616.20

$1,609.30

0.75%

3.15%
(per troy ounce)

 








Copper (-HG)

$3.389

$3.368

-3.07%

-1.37%
(per pound)

 








Silver (-SI)

$27.8630

$27.8010

0.91%

-0.19%
(per troy ounce)

 








Wheat (-ZW)

$8.9325

$8.9125

17.96%

36.84%
(per bushel)

 








Corn (-ZC)

$8.0500

$8.075

26.82%

24.52%
(per bushel)

 








Cotton 

$0.7572

0.7394

6.15%

-17.41%
(per pound)

 








Coffee

$1.7550

1.738

2.81%

-23.58%
(per pound)

 








Crude oil (-CL)

$92.20

$91.40

8.52%

-6.71%
(per barrel)










 
177Comments
Aug 6, 2012 2:34PM
avatar

From The Detroit News: 


Democrats and Republicans alike should be distressed by President Barack Obama's disregard for constitutional limits on his authority. The president's flouting of the separation of powers risks turning this country into something other than a representative democracy. Congress should move in a bipartisan rebuke of Obama's overreach before he neuters that institution.

In a blatant challenge to the legislative branch, Obama by executive order tossed out the Clinton-era welfare reform that required able-bodied aid recipients to work, saying the federal government will no longer enforce the law.


This follows the president's unilateral rewrite of immigration law, using an executive order to implement elements of the DREAM Act, which Congress refused to adopt. He also has thumbed his nose at the No Child Left Behind Act, and has put in place cap-and-trade carbon rules that were specifically rejected by Congress.


He can't do these things, by any reading of the Constitution. And yet he is. Because Congress, whose powers he is usurping, hasn't risen to stop him.




Aug 6, 2012 2:20PM
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how can things get better so fast when everything is so screwed up. or so you report .magic wand floating around or is the crystal ball clearing up?????? same bait new day! still smells like BULL SH--T!!!!!!!!!!!
Aug 6, 2012 3:30PM
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The Market moving higher on "hopes" to solving the Euro debt crisis.  I "hope" I win the the lottery.  What do the 2 sentences have in common?  Answer...the chances of either one happening are "slim to none"
Aug 6, 2012 2:34PM
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Stocks rally on European  BULL "S".  Perfect keep on investing your hard earned Money in Fraud Street !  You are going to Lose it !
Aug 6, 2012 2:37PM
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I don't always talk to liberals, but when I do, I always ask for large fries.
Aug 6, 2012 3:26PM
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Why do the "Lonely Hearts Posts" get thru on this MSN site but people with something related to the article are told to try again later?
Aug 6, 2012 3:17PM
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Can you say "Irrational exuberance?"  And more and more it looks like Germany, especially Freistaat Bayern,  will not back up ECB President's Draghi's promises promises...
Aug 6, 2012 3:22PM
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LET HOPE QE3 does good Oh! I mean the strong euro does good...   such bully crap.....

Aug 6, 2012 2:56PM
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Get Ready for massive Voter fraud to take place thes next elections . Delegates will fraudulently vote for the wrong percentage of the popular vote Obamas way...Obama will bring us close to a communist social state...GET READY TO THE FEMA CAMPS ARE FOR US...!!!! AND EVERYONE THAT SPEAKS OUT...!!!!
Aug 6, 2012 6:30PM
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Obama Followers:

1- Nasa didn't land Curiosity on Mars, somebody else did that....maybe Obama himself did it...

2- Saab (Spyker) is suing Goverment Motors.......what's Obama saying about this?

3- here I quote:

"3000 GM dealerships closed in total, over 250,000 direct jobs lost with an estimated 300,000 support jobs lost as part of Obama's UAW 'Let's save the union jobs' bailout.  The ORIGINAL purpose of the Detroit bailout that Bush signed was to PREVENT GM and Chrysler from filing bankruptcy. Instead, Obama FORCES them to file. And the only winners were the Unions."

4- here I quote:

"Hope Spyker wins. GM should have declared bankruptcy and been sold for scrap."

WHO IS RUNNING THIS COUNTRY IN THE DITCH.......................THE UNIONS.

Aug 6, 2012 5:45PM
avatar
Holy cow! You mean elected politicians would profit from illegal means while in office? How third world....oh wait this was/eerrrr is America. I do not want to see any body's tax return. They will be a pack of lies simmilar to the crap they spout to the corrupt, useless media everyday. Folks the politician are large and in charge and the only difference between the, ahem, parties is the sort of pockets get lined while they are in office. We need to do something to make them afraid of us in general. We need a national strike. Re-read the declaration of Independence, we have that right as citizens of this country to deny the government that is offered to us and we can demand better. Don't know about the rest of you that post here but my pursuit of life, liberty, and happiness is no longer supported and protected by our current, very deteriorated form of government. You can not vote for change if the choice is just the other side of the same coin. 
Aug 6, 2012 4:18PM
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Seems like we will break the streak of 9 down mondays but, and that is why we advise caution; at 1540 hrs manipulators started doing their thing, bastards will never ever give up...A few more minutes and it would have been 10 mondays down in a row....Unreal....We couldn't make this up people, truth is stranger than fiction. Remember, we can be up 100, 200, 300, doesn't matter; when crooks take over things change in a NY minute...Oh well.

Aug 6, 2012 2:30PM
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Hope on this one time.  When market is down    I get more Pesos and Can. Dollars for my money.
Aug 6, 2012 6:08PM
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Obama promised to change Washington, the special interest groups and corp. welfare and earmarks they are still taking our money. Why worry a poor person getting a loaf of bread. Again I ask, Where is the Change???
Aug 6, 2012 3:27PM
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Lady:  Did you find out why michell  and  dumbo cant practice?

Aug 6, 2012 5:51PM
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Q. Why is Barry airing ads (in spanish) begging people to apply for food stamps? 

A. People that are dependent on the Gooberment are much more likely to vote libtard in November.
Aug 6, 2012 4:13PM
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Nice little PUMP and DUMP by the scumbags...sooo obvious but at least we know they are just playing each other...
Aug 6, 2012 9:10PM
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I would rather try my luck in the casinoes.I call it luck because the stock market has no more basic fundamentals and don't trust anything about our Markets.

Aug 6, 2012 4:57PM
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Sorry to disagree with you PETE.....this is the worst things have ever been at our house, and the worst year so far for our employer in 47 (FORTY SEVEN) years and all this since this lame president has been in office.  We've lost a third of our income and half our health insurance under this administration.  I really don't see the nimrod getting re-elected, he has no leadership abilities.  And you know if I know this, many many people know this and we all vote.  All those who have lost their homes..vote..all those who have lost their jobs ...vote..all those who are underemployed..vote all those who now have to work two jobs to pay the mortgage vote..all those who go the grocery store and see a block of cheese is now 6.99 when it used to be 4.00...vote..tick tock..his time is running out.
Aug 6, 2012 6:41PM
avatar

Urena

 

Again I ask, Where is the change in Washington????  He promised to change Washington, we voted for the change, we didn't get it. It is business as usual, He throws money at problems, that he could solve with leadership. I like the guy, I just feel I got short changed.

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