Dow jumps 163, recovers all of Monday's loss

Global stimulus talk helps the blue chips to their fifth gain in six days. The market is led by materials and industrial stocks. Apple recovers from early losses. Michael Kors profit impresses. Boeing rises on an upgrade. Oil and gold move higher.

By Charley Blaine Jun 12, 2012 12:35PM
Charley BlaineUpdated: 9:41 p.m. ET

The relief rally many people expected -- but didn't get -- on Monday arrived today. It's not clear if the rally can continue on Wednesday.

The Dow Jones industrials ($INDU) made back all of their 143-point loss on Monday. The Standard & Poor's 500 Index ($INX) and the Nasdaq Composite Index ($COMPX) recovered most of their Monday losses in rebounds built on chatter that central banks around the world will make more moves to stimulate the global economy.

The rally pushed gold (-GC) and crude oil (-CL) prices higher in New York. The dollar moved lower against major currencies, which almost always helps stocks. And Apple (AAPL), off as much as $4.47 in early trading, rebounded to $576.16, up $4.99. The gain boosted technology stocks.

Also giving the market some cheer: more talk of a European banking union to stabilize banks in Spain, Italy, Greece and elsewhere. Germany has started to say it won't agree to any banking union without a fiscal union.  "Whoever is footing the bill must also have a right of control, particularly when it comes to the large sums that are seen in banking crises," Bundesbank vice president Sabine Lautenschlaeger said in a speech today.

The Dow closed up 163 points to 12,574. The Standard & Poor's 500 Index ($INX) gained 15 points to 1,324, and the Nasdaq Composite Index ($COMPX) jumped 33 points to 2,843.

Article continues below.
The Nasdaq-100 Index ($NDX), heavily influenced by Apple, rose 29 points to 2,546.

The S&P 500's gain recovered 91% of its Monday loss; the Nasdaq's gain was more than two-thirds of Monday's loss.

After the close, computer-maker Dell (DELL) shares rose 2.5% to $12.27 after the company announced it plans to pay a quarterly dividend of 8 cents a share starting in the fiscal third quarter. That would translate into a dividend yield of 2.7%, based on today's close of $11.97.

How much the dividend will help the stock is a question. It's down 18.2% this year.

Wednesday brings a Commerce Department report on May retail sales and the Labor Department's May report on product-price inflation.

France, Germany and Italy will issue their consumer price index reports for May. The European Union will report on industrial production in the euro zone.

Futures trading suggests U.S. markets will open lower in large part because of worries about Greece and Italy.

More stimulus coming?

The speculation that central banks will do more to stimulate the global economy came after Fitch Investors downgraded 18 Spanish banks today.

At the same time, Charles Evans, president of the Federal Reserve Bank of Chicago, said he would support measures to generate faster job growth, underscoring his preference for more stimulus.

Evans has consistently called for more efforts by the Fed, but there's been a deep divide among Fed officials on the question. Several regional bank presidents want to start raising rates, fearing inflationary pressures are building.

The Fed's rate-making body, the Federal Open Market Committee, meets next week, with a rate announcement due on June 20. Evans isn't a member of the committee this year but is widely respected.

A big question is why the market rebounded as strongly as it did after Monday's drubbing. One reason, The Wall Street Journal suggested, was computerized trading that ignores fundamentals but looks for pricing opportunities.

Also, there wasn't any bad news, and the market apparently found some sort of a bottom a week ago when the Dow, S&P 500 and Nasdaq dropped below their 200-day moving averages and quickly recovered, the Journal noted.

Plus, relative strength indexes for the the trio had dropped below 30 as the month turned. Those are signals a market or security is oversold.

Crude oil and gold mostly move higher
Crude oil in New York rose 62 cents to $83.32 a barrel. Brent crude, however, was off 75 cents to $97.25 a barrel.

The retail price of gasoline was flat at $3.542 a gallon, according to AAA's Daily Fuel Gauge report.

Gold settled up $17 to $1,613.80 an ounce but has been falling back in electronic trading. Silver (-SI) added 33.3 cents to $28.95 an ounce. Copper (-HG) was off slightly to $3.3355 a pound. (An earlier version of the post incorrectly stated gold's settlement price.)

Interest rates were higher, with the 10-year Treasury yield rising to 1.651% from 1.6% on Monday. The dollar was down slightly against major currencies.

Energy prices -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Crude oil (-CL)

$83.32

$82.70

-3.71%

-15.69%
(per barrel)











Heating oil (-HO)

$2.6215

$2.6357

-3.02%

-10.04%
(per gallon)











Natural gas (-NG)

$2.2320

$2.2180

-7.84%

-25.33%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.6502

$2.6566

-2.66%

-0.27%
(per gallon)











Brent crude 

$97.14

$98.00

-4.64%

-9.54%
(per barrel)











Retail gasoline

$3.5420

$3.5400

-2.15%

8.12%
(per gallon; AAA)












Industrials and energy sectors lead the market
Industrial stocks were the market leaders, followed by materials and financial stocks. All 10 sectors of the S&P 500 were higher. The laggard was utilities, up just 0.1%.

The Dow Jones Utility Average ($UTIL) was up 1.18 to 478. The Dow Jones Transportation Average ($DJT), closely watched as a leading economic indicator, rose 43 points to 5,035.

Boeing (BA) was the Dow leader, up $2.47 to $72.58, after analysts at Sanford Bernstein upgraded the stock to "buy" with a price target of $92. Next were JPMorgan Chase (JPM) and Bank of America (BAC), up 95 cents to $33.77 and 21 cents to $7.49, respectively.

Boeing, IBM (IBM) and Caterpillar (CAT) added 43 points to the Dow's gain. Twenty-nine of the 30 Dow stocks were higher. The one loser: United Technologies (UTX), down 27 cents to $74.35.

Meanwhile, 446 S&P stocks were higher, led by solar-panel maker First Solar (FSLR) and Federated Investors (FII). Laggards were St. Jude Medical (STJ) and Harman International (HAR).

Eighty-six Nasdaq-100 stocks were higher, with gains for Apple, Microsoft (MSFT), Qualcomm (QCOM) and Intel (INTC) contributing 12 points to the index's gain. (Microsoft is the publisher of MSN Money.)

Michael Kors Holdings (KORS) rose $2.92 to $41.10 as the luxury-goods maker and retailer forecast earnings and sales that beat estimates. The shares hit as high as $42.74. 

U.S. shares of Bombardier (BDRBF) surged 24 cents to $3.79, and Textron (TXT) rallied 94 cents to $24.52 as NetJets, a subsidiary of Warren Buffett’s Berkshire Hathaway (BRK.B), agreed to buy as many as 425 planes from the companies for $9.6 billion. Textron owns the Cessna line of private airplanes. 

Short hits from the markets -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0900%

0.080%

28.57%

800.00%
5-year Treasury note 

0.747%

0.691%

11.33%

-10.00%
10-year Treasury note

1.661%

1.600%

5.06%

-11.22%
30-year Treasury bond

2.772%

2.723%

3.74%

-4.05%
Currencies











U.S. Dollar Index

82.449

82.548

-0.82%

2.39%
British pound

1.5538

1.5477

0.81%

0.00%
(in U.S. $)

 








U.S. $ in pounds

£0.644

£0.646

-0.80%

0.00%
Euro in dollars

$1.25

$1.25

1.02%

-3.62%
(in U.S. $)

 








U.S. $ in euros

€ 0.801

€ 0.802

-1.01%

3.76%
U.S. $ in yen 

79.68

79.39

1.43%

3.35%
U.S. $ in Chinese

6.39

6.35

0.17%

1.05%
yuan











Canada dollar

$0.973

$0.969

0.49%

-0.80%
(in U.S. $)

 








U.S. dollar 

$1.028

$1.031

-0.49%

0.80%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,613.80

$1,596.80

3.17%

3.00%
(per troy ounce)

 








Copper (-HG)

$3.336

$3.343

-0.89%

-2.92%
(per pound)

 








Silver (-SI)

$28.949

$28.616

4.29%

3.70%
(per troy ounce)

 








Wheat (-ZW)

$6.160

$6.305

-4.31%

-5.63%
(per bushel)

 








Corn (-ZC)

$5.840

$5.920

5.18%

-9.67%
(per bushel)

 








Cotton 

$0.6781

0.6875

-5.62%

-26.04%
(per pound)

 








Coffee

$1.5535

1.567

-4.66%

-32.35%
(per pound)

 








Crude oil (-CL)

$83.32

$82.70

-3.71%

-15.69%
(per barrel)










 

147Comments
Jun 12, 2012 12:46PM
avatar
And we wonder why government can't get their house in order. A talk of more stimulus (more debt) and more kicking the inflation can down the road and the market perks up. Bad move, bad idea. The economy has had enough hand outs. It needs to stand on it's own.
Jun 12, 2012 12:59PM
avatar
That's why this world is up side down...How can more stimulus be good for the Stock markets, our national debt and our sinking economic environment? If the government pumps more more money into the system to bail out and prop up a failing economy THAT IS REALLY BAD NEWS...! NOT GOOD NEWS...! That means tha all the stories of the economy is getting better and moving along is all A LIE! That means that the unemployment rate is getting worse! That means that the economy, GDP, is really in reverse. That means that fear of inflation is really starting to set in once all the tax relief programs are over. That means that all the QE 1 and QE 2 really did not work. That means that the line at the food stamp counter will be getting a lot longer to 3.2 million. WOW more layoff's, higher CPI prices.....and the snow ball keeps getting bigger......GET READY FOR THE COLLAPSE...it is coming!
Jun 12, 2012 2:18PM
avatar
I have one question for the People/Sheeple...has any country ever printed their way to Prosperity?  We need to ask the Ben Bernanke that question.
Jun 12, 2012 3:49PM
avatar
Stimulus. Andrew Dickson White wrote in his book: Fiat Money Inflation in France (economic story of the French Revolution) that the more fiat money that is printed, the further it compresses all but the wealthiest who live above the rest of the economy. The more we allow QE, the more we get hurt by the thinning value of the currency. When you look at all the aspects of this Depression in play now, further deflationary aspects could compress us to a point of no recovery. Sorry, but I'll take a bunch of bank failures over losing my freedom.
Jun 12, 2012 2:13PM
avatar

Won't work for the common man. Too many hands in the cookie jar.

Economics 101. Can't get out of debt by going deeper into debt. Especially when Wallstreet is stealing everything not nailed down.

Jun 12, 2012 1:43PM
avatar
Can anyone tell me what good Obama and the Dem. has done to help this country?  I say nothing, but get us further into debt.
Jun 12, 2012 1:39PM
avatar
Funny thing I just went down to my local unemployment office in Chicago and inside it and WOW is all I can say, anyone who says its getting better should go on down to there local unemployment office and see it with there own eyes, there was 100 people in the office if not more.
Jun 12, 2012 2:13PM
avatar

Unbelievable.  Did I not read just yesterday an article talking about how bad things are in Europe, when the dow to crashed 150 pts? 

 

Today it's "Also giving the market some cheer: more talk of a European banking union to stabilize banks in Spain...."

 

Yesterday it was: "The problem was the realization that the deal may solve little because Spain's economy is so weak."

 

I'm getting whiplash from trying to keep up with what the msm is telling me I should do. BUY! no, SELL!. no, today it's BUY!

 

The man behind the curtain is making a fortune......

Jun 12, 2012 1:34PM
avatar
Stimulas =  tax payer money      
Jun 12, 2012 4:04PM
avatar
it's just more debt, world debt, U.S. debt, Europe debt....where do you think this stimulus is coming from? like this is going to prevent a economic collapse? 125 billion isn't enough to bail out Spain's banks? that's nice....the whole world is a moron....
Jun 12, 2012 1:24PM
avatar
Obama and his policies are takeing us down the road of destruction!
Jun 12, 2012 2:30PM
avatar
Did you miss me? MSN blocked me and put me in time out. Don't know why, but I think it's because I don't like the Democrats....LOL
Jun 12, 2012 1:34PM
avatar
GM on the Road to Recovery?  Why Because they build 70% of there cars in China
Jun 12, 2012 4:02PM
avatar
What a joke - are we so foolish as to think that it's great economic news that Europe's economy is on the verge of collapse and will need one of those "stimulus" shots in the arm to stay afloat?  Are we so naive that we don't understand that Europe's "stimulus" will adversely impact the U.S. economy?

I think I'll write my dad today, "Hey Dad!  Great News!  We were about to lose our house but your bank bailed us out!  Thanks, Dad!  Let's see if Dad wants to invest in my next "get rich quick" scheme.


Jun 12, 2012 1:41PM
avatar
And as far as GM building there cars in China, that's just sad because they are suppose to be AMERICAN MADE, guess I will not be buying any off them anytime soon!
Jun 12, 2012 3:12PM
avatar
The Market has figured it out... All it needs to do is lag behind a bit and presto, the US tax payer will come rushing in and pump more money into it. Honestly, the FED is out of control. Until the Market (any Market: housing, finance, automotive, etc) corrects itself (own its own) without the meddling of the gov or fed we will just end up getting more of the same. Markets, just like people, respond to incentives. We should not be "stimulating" them again.
Jun 12, 2012 1:55PM
avatar
A few weeks ago the Fed told  GM 4.1 billion dollars that the tax payers I mean obama gave them will not need to be repaid. Then GM says they made money last quarter. Thanks to you tax payers and Obama. I bet GM gives money to get him elected again.
Jun 12, 2012 3:17PM
avatar
Dennis .............Stimulus does correlate with debt. It's called MONETIZING debt. In the short term its not much more than a sugar high. Long term it's detrimental.
Jun 12, 2012 3:40PM
avatar
hope & fear , good to know we are in such a good place financially in this Country! So tomorrow  stocks will fall or slip , trip , slide on fear.....lol....
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