Stocks rally on surprise EU deal

The Dow surges more than 200 points after Eurozone leaders agree to bail out banks and ease austerity measures. Oil jumps nearly 6%. US consumer sentiment drops to a 6-month low. Personal income and spending are little changed.

By TheStreet Staff Jun 29, 2012 9:10AM

TheStreetImage: Wall Street sign (© Corbis/SuperStock) Updated at 12:32 a.m. ET

By Andrea Tse

Stocks shot higher Friday as global markets cheered concrete steps announced at the European Union summit to relieve the region's debt crisis.

Leaders agreed to ease austerity measures and rescue banks directly from a regional bailout fund. They also revealed a $149 billion economic growth plan for the eurozone.


The Dow Jones Industrial Average ($INDU) was up 214 points at 12,817. The S&P 500 ($INX) was up 25 points at 1,354. The Nasdaq Composite ($COMPX) was up 68 points to 2,917.


The FTSE in London was surging 1.42%, and the DAX in Germany was jumping 4.33%. Hong Kong's Hang Seng index rose 2.19%, and the Nikkei in Japan closed up 1.5%.


Benchmark U.S. crude jumped $4.49, or 5.8%, to $82.18 per barrel in New York, while Brent crude rose by $4.09, or 4.5%, to $95.45 per barrel in London, The Associated Press reported.

The Thomson Reuters/University of Michigan's final reading on Consumer sentiment dropped to a six-month low in June, Reuters reported, falling to 73.2 from 79.3 in May. It was the lowest reading since December.

The U.S. Commerce Department reported Friday that Americans' personal income rose 0.2% in May, as expected, matching April's tiny increase. Spending was essentially unchanged, also as expected, after a downwardly revised increase of 0.1% for April. The personal saving rate was 3.9% in May, compared with 3.7% in April. 


Research In Motion (RIMM) disappointed Wall Street on Thursday with its fiscal-first-quarter results. The BlackBerry maker reported a much wider-than-anticipated loss, pushed back the launch of the BlackBerry 10 until the first calendar quarter of 2013, and announced plans to lay off 5,000 employees, roughly 30% of its workforce.


Nike (NKE) posted fiscal-fourth-quarter earnings Thursday that missed analysts' expectations. The sneaker maker reported a profit of $549 million, or $1.17 a share, on revenue of $6.47 billion for the three months ended in May; analysts were expecting earnings of $1.37 a share on revenue of $6.51 billion. The company attributed the year-over-year decline in earnings to lower gross margin, higher SG&A spending, a higher effective tax rate and costs related to restructuring operations in western Europe.


Anheuser-Busch InBev (BUD), the world's largest brewer, confirmed Friday that it will buy the rest of Mexican brewer Grupo Modelo that it doesn't already own for $20.1 billion.

Constellation Brands (STZ) will buy the remaining 50% of Crown Imports that it doesn't already own from Anheuser-Busch for $1.85 billion after Anheuser-Busch's deal to buy Modelo. Constellation and Modelo owned Crown as a joint venture.


More from TheStreet

Jun 29, 2012 9:54AM

Spending will remain tight until the middle class has some disposable income. Obamacare isnt the answer either. Here is what Donald Trump said about it.


Let me get this straight . . . …
We’re going to be “gifted” with a health care Plan we are forced to purchase and fined if we don’t,
Which purportedly covers at least ten million more people,
without adding a single new doctor,
but provides for 16,000 new IRS agents,
written by a committee whose chairman says he doesn’t understand it,
passed by a Congress that didn’t read it but exempted themselves from it,
and signed by a President who smokes,
with funding administered by a treasury chief who didn’t pay his taxes,
for which we’ll be taxed for four years before any benefits take effect,
by a government which has already bankrupted Social Security and Medicare,
all to be overseen by a surgeon general who is obese,
and financed by a country that’s broke!!!!!
What the hell could possibly go wrong?

Jun 29, 2012 11:09AM

Hi, I worked 34 years full time one co and destroyed my back. So hence I helped build this nation.

 Now I'm on SSDI and they're going to cut my benifits to pay someones medical who just jumped the fence and NEVER worked a day in their life and are not a citizen.

 Your welcome for my hard work


I can solve all our problems.

 1) if your not a citizen (i don't care how long you been here or born her) GET OUT!

2)   Have a box on our tax return Check yes if you wish to have some of your money go to Illeagles

          "     "     "   "    "     "     "          "     No if you don't

Well see how many democrates have their taxes taken out?

   Lets make it a choice of the people, have a pool of the money and when it runs out  OH WELL

Jun 29, 2012 10:09AM
The best june the market has seen in 13 years.  The biggest disconnect in american history, 
Jun 29, 2012 10:40AM
“America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves.”
“To stand in silence when they should be protesting makes cowards out of men”
Abraham Lincoln

Jun 29, 2012 11:04AM
Europe for the most part is still a financial disaster regardless of how much bailout "funny money" they throw at the problem it will not be solved this way.  How much money has Greece sucked in and are they any better off now than they were a year ago..NO!   Have their problems been solved...NO.  All of this is nothing more than manipulation and greed for those self-serving needs.  The media is obsessed with Europe and yet many of our own towns/cities/states here in America are in financial stress but with a few exceptions the media ignores reporting about it.  WHY???
Jun 29, 2012 9:46AM
In reality, when your income rises and savings interest rates don't match inflation, you're still technically in the negative territory.
Jun 29, 2012 11:12AM
So lets see, Europe reaches a credit deal and oil prices jump by almost $5 a barrel. How can this price jump be justified, oil speculation as always. There are no basic fundamentals to support this jump. Are we using more, no, did inventories fall, no. Oil speculation is one of the key factors why our economy is in the state that it is in. Greed is ruining our great country. If the oil futures trading keeps on going the way that it is, oil will once again be back over $100 a barrel and why, because they can as they answer to nobody. Washington need to put new restrictions on oil futures trading. Make these clowns take full physical delivery of all of the millions of futures they are buying ahead and see how they like that tune.

Predictions for Obama Care


1) Huge transfer of wealth to executives of Health Insurance Comapnies. Already companies like Blue Cross Blue Shield spend only 60 cents out of every dollar collected in preminums on health care cost and the other 40 cents out of each dollar goes to executive pay mostly and a little 5 percent goes to costs of doing the insurance (e.g. the 99 percent of workers at the insurance company and building rental, etc).


2) Huge trasnfer of wealth to executives of Hospitals which again have 40 cents of every dollar going to exective pay and only 60 cents going to costs directly associated with sick people. 


3) As medicare will move over to being merely brought insurance the cost saving of the current medicare system which only spends 2 percent on non health care costs like wages for workers and building rental and spends 98 cents on patient care will be gone in a couple of years. Leaving older S.S. retired people having to buy $20,000 a year insurance plans while being given only $5,000 to pay for the insurance.


4) As states opt out of the medicare system as they would be forced to cover minimum wagers at state expense this means that half the workers who only make $16,235 a year on average will have to pay 2.5 percent of their income as penalty for not having insurance. That means they would have to pay $405 a year in penalties and still not have health care. Even the emergency rooms of hospitals will be closed to them as hospitals will not have to treat anybody under Obama care who did not have health insurance.


5) Illegal immigrants will have their health care insurance and co-pays and deductibles pay for by the US government as part of a deal worked out with the major industries that hire the illegal aliens in order to keep them in the country. As 50 million America citizens are forced out of the health care system as they can not afford health care the goverment taxed them for.


Yep the super rich are going to get richer and the rest of us are going to die from lack of medical care yet be taxed for it.

Jun 29, 2012 11:10AM
This accomplished one thing; division among the masses at a level not seen since the 1850's and 1860's.  The current debt cannot be digitized, monetized, or quantitatively eased out of existence and now "our" representatives have added the most costly entitlement program (tax - Obama "it's not a tax") in the history of this country on top of an already hopeless situation.   Nothing can be done for the sins of the past and present, except to take our economic medicine.  If you think that you will ever see affordable government healthcare, you're dreaming, in fact, you are also set-up to lose Medicare, Medicaid, and Social Security.  What do we have?  “A Republic, if you can keep it.”  - Benjamin Franklin, 1787.  This is not a Democracy and yet we fail to learn from history.  Winston Churchill once said "those who fail to learn from history are doomed to repeat it." Ancient Greece is a prime example of what our representatives are doing to us today.   The people couldn't support themselves, and relied on the wealthy to save them; sound familiar?  Piracy and terrorism was a signicant problem. Ultimately, domestic problems caused Greece to fall.  One thing is common across the ages; people live in denial and cannot believe that disaster will befall them.  "May the odds be ever in your favor" - The Hunger Games, 2012.
Jun 29, 2012 9:54AM
Sick and tired of this market manipulation!!! Obama is a goner in November!!
Jun 29, 2012 10:10AM
I notice that there is no mention of the price of crude, I suppose now that the EU has done something, the demand will jump all be it for NO reason at all except just, so, we will need to increase that as well, because it doesn't matter if people can't afford gas, food, utilities, clothing, car insurance, homeowners insurance, life insurance, now health insurance, or if you don't a NEW tax, along with property tax, income tax, SS tax, medicare tax, state tax, city tax, county tax, school tax, you get the idea, I believe that Brutus maybe on to something as well as all of the "nutjobs" that are warning that we need a revolution just my 2 cents.
Jun 29, 2012 11:20AM
Don't bite this one people.............we almost forgot, this is nothing more than the European central banks trying to pump and dump the market to gain access to more bailout funds....................make sure they're bailout is not at your expense!
Jun 29, 2012 10:22AM
"Stocks rally on surprise EU deal"


The fix is in, it appears Wall Street needed some news to make the quarter end up. So they role the old Europe good news model out. How many times have we heard that Europe  is taking care of business? So let's look at this, they artificially cut borrowing cost so the losers can borrow more money. Next month we'll hear the losers still can't keep up with paying their debt again.


It's interesting that we were once were concerned about businesses reporting bogus numbers, now we have countries and continents reporting bogus numbers.  


Time is running out and a dose of reality will be our next jolt, not fiction.


Stay thirsty my friends.

Jun 29, 2012 11:12AM

"Stockton, California, became the largest city to file for bankruptcy in U.S. history on Thursday after years of fiscal mismanagement and a housing market crash left it unable to pay its workers, pensioners and bondholders."


Obviously, with all the focus on Europe and their bailout, nobody cares about Stockton, CA and the many other cities in the US that are in trouble.  I guess Stockton's solution is just go print up more money to get out of debt...after all it is now the new economic policy for both Europe and America!

Jun 29, 2012 10:05AM
More Friday BULL  "S" From FRAUD STREET !   Take your money and RUN !
Jun 29, 2012 10:52AM
folks, this is nothing but another headline word play by those few in power who control the media.  It's a coordinated false flag perfectly timed with record short positions in Euro/Dollar currency plays.  Simply put, this is a massive "short squeeze" (not a "rally") by the crooks at the helm.  period.  Don't get sucked in!!
Jun 29, 2012 10:59AM

The Eu scraped thier austerity measures (reduced spending) to bail out some banks. They call it concrete steps toward a stable EU economy.


This is just a band aid.....if they & the US continue with deficient spending...this problem will come around again probably within 2 years.


And when it does it will be much more painful for us all.


All human beings must balance thier budgets & pay off debt.

Jun 29, 2012 9:56AM
CL - the new bio-fuel tax is all fine, but there are much bigger fish to fry.  As of now, it would be perfectly constitutional for the federal gov to tax, er, "penalize" anyone who doesn't purchase an electric vehicle.
Jun 29, 2012 10:44AM
Look....  Nothing has changed in the EU.   All their massive deficit spending remains.  None of them has cut their spending.  What has happened is that the EU has decided the will protect their banks from bad government debt, by either borrowing or printing (i.e Debase) to do so.  

This is just a band aid.  I solves nothing.  The PIIGS still cannot pay back what they have borrowed.

So if you think this is solved, HOW MANY EURO BONDS should I put you down for?

Jun 29, 2012 10:55AM

Wow?  The market sees this as good news?


Let's see, they've bailed out Greece three times in less than two years, Ireland two times working on a third and they are about to bail out Spain.  Up next Italy and Portugal?


From my view on this side of the pond it looks like the people of europe have allowed the banks to take over their lives.  Now they are going to have a centralized european union "bailout bank"?


And, BTW, where's all the front page news stories about stockton California filing for Bankruptcy?  Where's the front page news about the 10 American states that are in dire fiscal straights?

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