Stocks hit 3-month highs on European bullishness

Updated 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.

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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-expect​ed 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)