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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-anticipat​ed 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-quarte​r 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.

 

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259Comments
MirageGuy
Jun 29, 2012 2:13PM
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I guess I best plan to layoff more people, just in case Obama is re-elected.    You Obama voters can pick up the slack....
MirageGuy
Jun 29, 2012 2:11PM
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Corporations are not in the business of generating money for government to SPEND.  They are in business to generate money for their shareholders to SPEND.  

Government is an albatross around everyone's neck.  More government should be avoided like a plague.  A growing government MEANS a poorer and poorer middle class.   Government never exceeded 18% of GDP under Clinton.  It  is not 26%+, is  it any wonder the middle class and poor are far worse off?   

The Donkeys will keep trying to borrow and spend our way out of debt, Tax our way to prosperity and Debase our currency.  How is that working our for ya?
Re-TOG Re-TOG (Re-TOG)
Jun 29, 2012 2:02PM
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Yup Steve diversity is the KEY....And that just doesn't mean investments in Stocks or Mutual Funds..

 

Yourself,real estate,stocks,saving​s your family and the like....

 

BTW....I have NO money in Mutual Funds....Period.

 

And I will leave you and others with this...Before We leave, to head out to a Casino.

A thought to remember " Don't save so much for rainy days, that you can't enjoy the sunny ones."

 

Others have eluded to this here also.......

carl dipshit
Jun 29, 2012 1:49PM
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No permanent full time position............​...No spend any money!  That's life in the big city!
GUSTAVO URENA
Jun 29, 2012 1:40PM
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Maybe we should look at how the German's do it.

Mixed economy at it's best.  

Not that we should emulate exactly but let's look at what works out there and what doesn't work.  Let's use a scientific approach with reasoning, logic, experience and innovation and item by item eliminate what does not work, improve on what does and innovate on new solutions.

We keep going back and forth Dem. Rep. Conservative, Liberal and perhaps we need to be so objective that once the labels are removed, the free flowing ideas that are good will stand onit's own merits regardless of which side of the aisle it came from.
Tumbleweed 1946
Jun 29, 2012 1:40PM
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 Bankruptcy would mean, by law , that tax revenue must go to pay SS and medicare FIRST and if anything is left over it can THEN go to defense and education. It is called discretionary versus non discretionary. If there ISN"T enough left over for defense and education you have 2 options - raise taxes to pay for them or do without. NO MORE borrowing from the Capitalists to pay for things
USARogue
Jun 29, 2012 1:34PM
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Someone,

 

You stated, correctly,,,

“In order to fix the economy we need to understand the we are a consumer nation and we need people to have cash to buy stuff so people can be hired to build stuff so they can buy stuff and so on.”

Your conclusion, however, is irrational.

Yes, we have become a “consumption/service​ sector” economy. The problem with your logic is that we don’t “build stuff” here anymore. Yes, we build large ticket items such as aviation, construction and commercial products but we don’t build apparel, common appliances and other consumables. We have a $600 Billion annual trade deficit to prove that.

In 1965 our economy was based on 53% domestic exportable manufacturing industries. Today it is 9%. Outsourcing has contributed to this but more importantly technology, automation and decentralization of industries is the bigger part. Even if we give people cash, (stimulus, lower interest rates, etc) we consume products built overseas. That consumption supports THEIR jobs and economies, not ours. Once again, $600 billion trade deficit. We used to be the largest exporter in the world with the largest creditor economy. Today we are third in exports, behind China and Germany, and have become the largest debtor nation in history. The correlation is obvious.

Our economy is a shambles because of monetary malfeasance, fiscal malinvestment and government’s incessant intrusion into the private sector. To believe our criminal and incompetent government is capable of any type of efficiency or fiscal management is ludicrous. Evidence is our soon to be $16 Trillion National Debt, but more importantly our $120 TRILLION of Unfunded Liabilities. We will never correct our economy based on consumption. If you believe we can, I challenge you to show me any economy in history based on such that has created the wealth, prosperity or standard of living we enjoyed when we built things and sold them to the rest of the world.

Our only long term solution is to bring as much exportable industry back to our shores as possible.

As an aside. Isn’t it interesting that we have a consumption based economy yet we tax based on production?

 

 

endworld41
Jun 29, 2012 1:33PM
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And once again the Dow is up because more "money " is being created to help out the economy in Europe grow. I can't imagine the total amount of debt all these countries will soon have on one another and debt cannot help make an economy grow. Perfect example is when a person max's out there credit cards and gets a bunch of loans, yes everything is good while it last, and then it is time to pay and you don't have the money, your credit score suffers, you get collection calls and then you file bankruptcy. End of story.
lazyfatrepublicanpig
Jun 29, 2012 1:28PM
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And tomorrow stocks will drop because the Greek PM farted!  The Stock Market is a joke!  The ups and downs are based upon things of no real cosequence!
Common Sense582
Jun 29, 2012 1:28PM
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NOTHING HAS CHANGED!
Some very good and valid comments have already been made on this site.
North America is a consuming society. In order to consume, you MUST have the money to consume.
This is where the start of the problem is. Society does not have the same money they had in previous years. Why? Because the hundreds of thousands of jobs of years ago, no longer exist in North America. These jobs have been outsourced to Asia and India. Therefore, the incomes have been lost.
The irony is that the North American society continues to consume ALL these outsourced products because they have to. All the kitchen goods are still needed (dishes, cutlery, appliances, etc) and 99% of these goods are outsourced. This situation now applies to literally every consumer product. It is all outsourced. 
This means there is more general CASH leaving the country, going to Asia and India. Fifty years ago, this was NOT the case.
Times have changed and Asia and India are raping the rest of the world. There is no "global economic balance" and there hasn't been for at least thirty years.
This is why Europe is in this financial situation and North America is next.
The world CANNOT compete with salaries of $50.00 per month.
European and North American governments have done nothing to address this fact.
Re-TOG Re-TOG (Re-TOG)
Jun 29, 2012 1:27PM
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Well then Steve, I really have trouble what you seem to be bitching about...??

 

When my brokers/advisors wanted to start charging me 1% for doing little, I went along for awhile..

Christmas cards, Free luncheons, a Couple of Champagne parties a year, were costing us and other investors dearly....When i told them NO on increases of maintenance fees,but they said we will give you 50 "free trades" in a rolling year.... I started looking for alternatives..It's worked out very well over the last dozen or so years....I maintain 4 portfolios and do about 110-135 trades per year or a rolling 52 week cycle..And we have saved 10s of thousands since leaving them.

And we can invest in any type of instrument available on any Market anywhere.

Tumbleweed 1946
Jun 29, 2012 1:27PM
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In reality it has been Capitalist  and Fed smoke and mirrors since TARP. Some day they are going to kick the can onto a busy interstate instead of down the road.  And then along comes a Socialist with a Mack truck as Uncle Ben tries to weave his way through the lanes for one last kick and SPLAT!
BillyJack55
Jun 29, 2012 1:20PM
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I work in a government facility as an contractor. My employer has the 401K retirement option & matches up to 4% of my pay that I put into MY RETIREMENT account. I can't tell you how many people here opted out of the 401K & went to the IRA option. I think I have ran into about a dozen people that have done that.

 

It that stupidity or what? 

 

Your employer is going to match up to a certain amount by %.....& you don't want want it?

Talk about stupid Americans. And there is about 15 % of them that don't even participate in the 401K retirement plan..........OMG

Tumbleweed 1946
Jun 29, 2012 1:15PM
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IDK..Bankruptcy means something replaces the busted banks and failed dollar And disgust will ensure it isn't more failed Capitalism
so inflation it is instead to keep the status quo intact. it just means more trickle down cash  for the upper class to sow the seeds of the " new economy".and with no debt ,all gone bye by due to inflation. Those on fixed income eat cake or rely on the thousand points of charity lights. Non producers anyway
Realistic American 321
Jun 29, 2012 1:12PM
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This isn't a good thing. Contagion is spreading in Europe. First Greece, now Spain, and next Italy. Don't worry though we won't be left out here. We are now the stagflation nation. We barely produce and we over consume. Our government is blowing through money like its infinite, and yet everything is Europes fault. If we are going to weather the coming storm we need production, not consumption. We need savings, not spending. And most importantly we need the government to stay out of the private sector, let the too big to fails fail! Maybe then we can have a real recovery.
ok credit person
Jun 29, 2012 1:11PM
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true today up 200 points on news or deal its all lies i tell you we benn hearing the same stuff for months now , up an down , up an down , im getting sea sick of all the waves of b. s. next week some joker is going to say something an the market going to drop like a rock  this time it well not recover an the feds are going to brace up the market again , how many other business are going to get caught  from controling the rates  how many ??? 100s or thousands the banks are scam artists  three card montie
BillyJack55
Jun 29, 2012 1:07PM
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Economy wise

 

The very best thing a country, a community or a simple family household can do....is.

 

Balance's thier budget...and pay's down debt......PERIOD.

 

The very worst thing that a country a community or a family can do is.....deficit spending.

Tumbleweed 1946
Jun 29, 2012 1:05PM
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Okay Merkel blinked and " saved" the Spanish banks. Next up : will she give Greece the next bailout payment when the commission reports no progress towards austerity measures demanded? Let's see what Wall Street thinks about that come Monday.The clock is still ticking towards a due loan payment and no cash to make it with

She MAY say okay Igave in on Spain to show i'm a good compromiser and that is IT, She may not want to be seen as  a door mat by caving in on Greece too
IDK and ME
Jun 29, 2012 1:02PM
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Europe and Americas debt crisis - You either payoff the debt or bankruptcy. All the rest of this political and economic maneuvering is lying to ourselves.
Someone
Jun 29, 2012 1:01PM
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Economic 101

 

When they housing bubble burst the economy lost over 200 trillion of value and working capital.  This has to be rebuilt the old fashion way.  The biggest problem is how to get to the many the purchasing power that is needed to "Jump Start" this economy.  However if you just give to the few, then of course you are doomed to fail and therefore Europe's bailout will of course come up short and the market once again may stagger or even crash.  Whatever happens in Europe will happen here and when it does then what?  Instead of calling this "The Great Recession" do we call it "the Great Depression Deaux".  In order to fix the economy we need to understand the we are a consumer nation and we need people to have cash to buy stuff so people can be hired to build stuff so they can buy stuff and so on.  That is how the free market works (stange to call it free market when nothing is really free).  Just giving money to "Banks" and "Job Creators" will not fix anything.  That is only plugging leaks of cashflow and not building up anything.  when this is understood maybe then and only then will the economy recover and begin to grow.

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