Stocks turn higher on stimulus hopes
Traders shrug off a downgrade of 18 Spanish banks as the Chicago Fed president says he favors more easing in the US. Spanish bond yields rise. Verizon revamps its plan pricing.
Updated at 12: 22 ET
By Andrea Tse
Stocks rose Tuesday on talk of more stimulus for the U.S. economy, reversing previous losses on news that Fitch had downgraded the long-term ratings of 18 Spanish banks.
The Dow Jones Industrial Average ($INDU) was up 95 points at 12,506. S&P 500 ($INX) shares were up 8 points at 1,318, and the Nasdaq ($COMPX) was up 19 points at 2,828.
U.S. stocks shed more than 1% Monday as initial excitement about Spain's bank bailout plan was usurped by worries over the country's increasing debt load. Uncertainty surrounding the outcome of this weekend's elections in Greece also soured sentiment.
Trading is expected to remain volatile ahead of Sunday's election in Greece, which could still result in the country's leaving the eurozone, The Associated Press reported.
Spain's benchmark borrowing rate reached its highest level since the country joined the euro after Fitch downgraded 18 domestic banks, AP reported. Its 10-year bond yield traded at 6.78%. Fitch attributed its bank downgrades to a previous downgraded of the Spanish sovereign debt on June 7.
Federal Reserve Bank of Chicago President Charles Evans said in an interview with Bloomberg TV that he favors "pretty much any accommodative policy" and said that extending Operation Twist would be useful.
Economists at Capital Economics noted that unless the economy loses a lot more momentum or the financial contagion from the Europe debt crisis turns out to be much greater than expected, a third round of Fed quantitative easing is unlikely.
The economists added that the Fed may respond to the weaker tone of the incoming data by announcing a short extension to its Operation Twist program at next week's Federal Open Market Committee meeting.
The FTSE in London was up 0.71%, and the DAX in Germany was up 0.41%.
The Bureau of Labor Statistics reported that U.S. import prices fell 1% in May, as expected, after no change the previous month. Lower fuel and nonfuel prices contributed to the May decrease in overall import prices. Export prices also declined in May, falling 0.4% after a 0.4% increase in April.
"Overall, a modest read on inflation pressure, keeping with the trend as energy prices continue to decline," said Ian Lyngen senior bond strategist at CRT Capital.
The Treasury Department's budget report for last month is due out at 2 p.m.
Hong Kong's Hang Seng index settled down 0.4%, and the Nikkei in Japan shed 1%.
In corporate news, Verizon (VZ) announced it will drop most of its phone plans for pricing schemes that allow consumers to share data usage among up to 10 devices, The Associated Press reported. The new plans will let users add tablets and laptops to their plans, as well as family members' phones. The change will take effect June 28.
Michael Kors (KORS), the women's apparel maker, reported fourth-quarter net income Tuesday of $43.6 million, or 22 cents a share, up from year-earlier earnings of $17.4 million, or 10 cents a share.
Excluding a credit related to the company's initial public offering, Michael Kors had fourth-quarter net income of $41.6 million, or 21 cents a share. Fourth-quarter revenue was $380 million. Analysts, on average, expected Michael Kors to post fiscal fourth-quarter earnings of 16 cents a share on revenue of $360.9 million.
The retailer also said it expects first-quarter earnings of between 18 cents a share and 20 cents a share, and full-year profit of between $1.08 and $1.12 a share. Analysts expect first-quarter profit of 17 cents a share and fiscal-year earnings of 98 cents a share.
Juniper Networks (JNPR), the networking equipment maker, announced a new $1 billion buyback authorization.
Texas Instruments (TXN) raised the low end of its second-quarter revenue and earnings estimates and forecast revenue of between $3.28 billion and $3.42 billion, compared with prior guidance of $3.22 billion to $3.48 billion. Analysts are expecting sales of $3.35 billion. The company said it now expects earnings of between 32 cents and 36 cents a share, compared with a previous estimate of 30 cents to 38 cents. Analysts expect 41 cents a share.
Seagate Technology (STX) saw shares rise Monday after David Einhorn of Greenlight Capital disclosed ownership of more than 23 million shares, or a 5.4% stake, in the company. That's an increase from the 14.5 million shares, or 3.4% stake, that Einhorn disclosed as of March 31.
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STOP DEVALUING MY MONEY!
By continuing these policies of easy money we are just getting ourselves deeper and deepar into the hole. Our currency is becoming less and less valuable which can only result in hyperinfaltion somewhere down the road.
We are already seeing this in the price of fuel and food which is hurting the exact people that this admianistration says they are trying to help. There is currently the highest percentage of people getting assistance in the way of food stamps than at any time in our nations history.
The answer is not EZ Money and depandence on the government for our existence.
LET CAPITALISM WORK WITHOUT ALL THE MEDDLING!!!!
At this point, from a purely business point of view, long term stability trumps elections, political policy, etc... If you want to raise/cut taxes, fine, do it, but make it a long term deal, so we can plan and budget. This practice of extending tax policy a year at a time is idiotic. The same with regulations, permits, mandates, Fed policy, etc... It's the uncertainty and constant flip-flops and shifts of power and their associated changes that is inhibiting growth. We are sorely lacking a dependable, long-term plan/strategy that is clear and stable enough to support long-range business planning.... The lack of leadership is killing us...
Whether you like BS, or not, he does have a valid point about Chicago and other liberally controlled cities:
They have traditionally been run very poorly and had awful governance and fiscal responsibility.
Just look at many of the cities in this country that have been led by liberal Dem mayors and city councils.
Many of them have been run into the ground. '
'
This is just an observation. You can try and attribute the cause to something else. However, there is no denying that many liberally governed cities have been ruined.
All of the world's problems are from the high gas prices. Oil is back to where it was four years ago but fuel is staying very high. WHY?
If you tell me supply and demand I'm going to scream! That is BS!
If you have a dog track and a dog that does not run you would be selling that dog. Right!
It's time we have the Obama's move out of the White House and let someone that knows what they are doing take over.
As for QE3 - Hell no! I don't need my money in the bank to be worth less. All that is going to do is make me try to spend less. The next big ticket items I would be having to cut is my two kids college expenses.
They keep telling us how our kids need to get ahead by going to college but the cost are out of this world because they are allowing to many people from other countries attend our colleges.
We need to worry about Americans first!
1. Seal our boaders
2. Rewrite the tax code so that business will come back -
I would do away with income tax and go to a flat sales tax.
3.Throw out all of the people that are here on work visas once they expire.
4. Make it so that banks are not investment firms and they have to lend the money that take in to
American business and the American people.
5. Tell every company they are on their own if they get into a cash problem no matter what.
The American people are not lending anymore money.
6. Cut government spending acorss the board by 5% per year for the next three years.
7. No more export of bio fuels! If we are going to pay higher prices for food then LET US USE THE PRODUCTS THAT WHERE MAKING FROM IT.
8. If you purchase a stock or bond you must hold it for 30 days.
This is just a short list of what I would do ASAP to save ourselfs.
We should have just let the chips fall where they may in 2008 to cut a long story short.
As I remember it we did not get to decide..... if we had the small regional banks and credit unions would have picked up the pieces and our economy would have moved on. It would have been rough but by now we would be seeing improvement. Now all we see is delaying the inevitable with more devaluing of the dollar....... Criminal banksters and owned puppet politicians have created a disaster.
Fire them!!!!!!!! THEY ARE SUPPOSED TO BE WORKING FOR US?? If workers can not handle the job fire them an find someone who can handle it. EXCEPT with the choice we have from both parties niether seems able to take care of buss. without argueing an pointing fingers as to who is responsible for the problems facing us.
Seems all they look for is a way to feather their nest with our money!!!!!!!!!!!!!
Today's message to the comrades ?
Why, it's we need more public servants !
More cops, teachers , firefighters , office workers, motor vehicle office workrs, more , more and more!
That's the stimulus! Getting everyone in America to work for big brother or stay home and collect the entitlements.
More government workers !
Isn't that original?
What a concept !
Increase taxes to pay for more deadbeats on the public dole!
That's the answer!
See, the private sector is "doing fine" so now-- if we could only concentrate on the public workers well then , the economies just PERFECT!
Who will pay for this utopia?
Surprise -- the 47% of the slobs left working!
Vote this bum out in Nov-- That's the "CHANGE" we need
I don't know about you, but looking at which stocks are UP today, it looks like toys and gimmicks, not anything the nation might actually see value in. At some point, you have to admit that you are hurting more than helping... even yourself.
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The benchmark average saw an opening loss of 1.2% after Japan's Nikkei tumbled 7.3%. Japanese stocks sold off amid continued volatility in Japanese Government Bond futures as the 10-yr yield spiked almost 16 basis points to 1.002 before the Bank of Japan's JPY2 trillion liquidity injection caused yields to retrace their gains.
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