Dow up 128 as a late rally boosts stocks

The rally comes despite weaker-than-expected US economic reports. Hopes grow for a new aid package for Greece. The major averages end May with small losses. A suscription plan for "Code of Honor" pushes Activision shares higher.

By Charley Blaine May 31, 2011 12:50PM

Charley BlaineUpdated: 8:25 p.m. ET

 

Stocks finished May with a big late-day flourish as investors ultimately shrugged off worries about the U.S. economy and bet instead that hopes for a new solution to the Greek debt crisis might work.

 

The gains, however, were not strong enough to push U.S. stocks into the black for May.

 

The rally offset concerns about home prices. Prices fell in March to their lowest levels since the U.S. housing bubble burst in 2006, according to the Standard & Poor's Case/Shiller Hiome Price Index. The declines were driven by foreclosures, a glut of unsold homes and the reluctance or inability of many to buy.

Consumer confidence wasn't as strong as expected, and a closely watched index of manufacturing weakened substantially.

The Dow Jones industrials ($INDU) finished up 128 points, or 1%, to 12,570. An early 133-point gain faded to as little as 40 points before the late buying kicked in. The Standard & Poor's 500 Index ($INX) finished at its high of the day, adding 14 points, or 1.1%, to 1,345.

 

The Nasdaq Composite Index ($COMPX) saw a 31-point gain drop to 12 points, then exploded to a 38-point gain at 2,835.

You could see the market's fluctuations in Caterpillar (CAT), which was up nearly 1.9% on the Greek news after the open. The gain was nearly wiped out, but the shares recovered to $105.80, up 1.2%.  Boeing (BA) had a similar experience. Shares rose to $78.35, then fell back to $77.41. They rebounded at the close to $78.03, up 1.4%.

 

While the rally was welcome, the Dow ended May down 1.9%, with the S&P 500 and the Nasdaq off 1.4% and 1.3%, respectively.  The declines, while modest, were the worst for the indexes since August, and the Dow's loss was its first since November. The Dow is up 8.6% for the year, with the S&P 500 up 7% and the Nasdaq up 6.9%.


Tuesday is a big day for the market. The Institute for Supply Management will release its manufacturing index for May. Auto makers will report May sales; expect a drop for the Japanese manufacturers. And the ADP National Employment Index will offer a look at private-sector employment trends.

Commodity gains fall back slightly

The Greek euphoria, meanwhile, pushed commodity prices sharply higher, but those gains have been trimmed by the U.S. data.

Gold settled down 50 cents to $1,536.80 an ounce. Silver, however, settled up 44.2 cents to $38.305 an ounce and was higher in after-hours trading. Copper was off a penny to $4.1775 a pound.

 

Gold was off 1.3% for the month, its first decline since January. Silver was off 21.2%. Copper finished the month basically even. (That explains why Freeport-McMoRan Copper & Gold's (FCX) was off 0.2% to $51.64.)


Interest rates were lower, with the 10-year Treasury note yielding 3.05%, down from 3.064%. The dollar was lower against major currencies, especially the euro.

 

Crude oil in New York settled up $2.11 to $102.70 a barrel. It had been as high as $103.39 and was drifting lower after hours. Brent crude was up $1.87 to $116.55 a barrel in London.

 

The national average retail price of gasoline was $3.78 today, according to AAA's Daily Fuel Gauge Report. Since peaking on May 5 at $3.985 a gallon, the average has fallen 20.5% or 5.1%.

 

Six states -- Alaska, Connecticut, Hawaii, California, Illinois and New York -- plus the District of Columbia, had average prices above $4 a gallon.

 

Energy prices -- New York close
 
  Tues.     Fri.     Month chg.     YTD chg.
Crude oil (-CL)

$102.70     $100.59     -9.86%     12.39%
(per barrel)

 

 

 

 
Heating oil (-HO)

$3.0530     $3.0014     -6.80%     20.02%
(per gallon)

 

 

 

 
Natural gas (-NG)

$4.6660     $4.5180     -0.68%     5.93%
(per mil. BTU)

 

 

 

 
Unleaded gasoline (-RB)

$3.1504

$3.0920

-9.07%

28.42%
(per gallon)

 

 

 

 
Brent crude 

$116.73     $114.68     -7.28%     22.20%
(per barrel)











Retail gasoline

$3.7800

$3.7850

-3.30%

23.05%
(per gallon; AAA)











Most markets were closed Monday for Memorial day.

 

Oh, that mediocre data
The day's economic data didn't cheer anyone. And it comes in a week that will end with the Labor Department's big report on unemployment and nonfarm payroll employment on Friday.

Consumer confidence dropped to 60.8 in May, according to The Conference Board’s index, after April’s reading of 66. The market had been anticipating a reading of 66.3.

Manufacturing activity in the Chicago area weakened significantly in May. Chicago's Institute for Supply Management’s purchasing managers index dropped to 56.6 in May after April’s reading of 67.6. May’s level was much weaker than the reading of 62.5 that economists had been forecasting, according to Briefing.com.
 
The S&P/Case-Shiller 20-city home price index fell 4.2% during the first quarter, putting prices back at 2002 levels. For March, the index fell 3.6%, exceeding expectations for a decline of 3.4%, according to Briefing.com. In February, the index fell 3.33%.

Nationally, S&P said, home prices are back to 2002 levels. Nineteen of the 20 markets covered by the index saw prices fall from year-ago levels. The one winner was Washington, D.C. The only markets to show gains in March over February were Washington, D.C., and Seattle.

Another aid package for Greece?
European stocks rallied strongly today as reports from The Wall Street Journal and others suggested that Germany is considering dropping plans for an early restructuring of Greece's debt, increasing the likelihood that Greece will receive a new loan package.

That will give Europe time, maybe, but the Greek situation won't go away. “The can has been given a good solid kick down the road and for a day or two or a week or so the problem has been postponed, but the problem exists nonetheless,” market watcher Dennis Gartman noted today.

 

The problem the Greeks have is simple. They can't service their national debt.

 

But to impose draconian cuts, as the European Central Bank and the International Monetary Fund are demanding, risks either a depression that won't be tolerated by the Greek people or a default on the debt and Greece's withdrawal from the European monetary union. That could start a new banking crisis all across Europe.

Over the weekend, Barron's recommended that bond holders be prepared to take a 50% writedown on their Greek bonds -- or risk worse.

 

It's hard to find a loser today

Today's rally was solid.

 

Twenty-nine of the 30 Dow stocks were higher. Pfizer (PFE) was the leader, up 2.5% to $21.45, followed by Cisco Systems (CSCO) and Alcoa (AA), up 2.1% to $16.80 and 2% to $16.81, respectively.

 

The laggard was McDonald's (MCD), down 0.1% to $81.54. Bank of America (BAC) was down for much of the day but finished up 0.5% at $11.75.

 

Meanwhile, 88 of the stocks in the Nasdaq-100 Index ($NDX.X) were higher, led by Activision-Blizzard (ATVI), up 4.7% to $11.99, and KLA-Tencor (KLAC), whose equipment monitors chip manufacturing processes. Shares were up 3.6% to $43.10.

 

Activision shot up on reports it will offer an online service to let users download extra content for its wildly popular "Call of Duty" games.

 

Apple (AAPL) was up 3.1% to $347.83. CEO Steve Jobs will address the company's annual developers conference on Monday to unveil a cloud service that lets users store content online and tout a new version of the software that runs the iPad and iPhone.

 

Technology, health care and financial stocks were the market leaders. But the 10 sectors of the S&P 500 were all higher.

 

Nokia shares get hammered

Microsoft (MSFT) closed up slightly at $25.01. Its smart-phone partner Nokia (NOK) slumped 14.4% to $7.02, after the company reported that business in its current quarter was tracking much worse than expected.

 

Nokia said it could no longer offer a full-year forecast, citing "multiple factors" that are "negatively impacting" its business. (Microsoft is the publisher of MSN Money.)

 

One of the biggest factors is that the devices using Google's Android platform are becoming very popular in Europe and Asia and taking business from the Finnish company.

 

Its first phone using Microsoft's operating system may ship in the fourth quarter of this year, earlier than some had expected.


Solar stocks jump as Germany vows to junk nukes
If you're a bull on oil, natural gas and solar energy, you're making money in a big way today. And you have German Chancellor Angela Merkel to thank.

Merkel announced Monday that Germany would phase out its 17 nuclear power plants by 2022. So, Europe's biggest economy will have to replace all that energy. That's great for solar. So, shares of First Solar (FSLR) were up 2.4%. LDK Solar (LDK) jumped 8.1% to $7.59.

Meanwhile, uranium shares tumbled on the German news. Cameco (CCJ), the largest uranium producer, was off 3% to $28.06. UR Energy (URG) dropped 8.3% to $1.65.


Short hits from the markets -- New York close
 
  Tues.     Fri.

Month chg.

YTD chg.
Treasury yields




 





13-week Treasury bill

0.050%

0.040%

25.00%

-58.33%
5-year Treasury note 

1.688%

1.709%

-14.53%

-16.27%
10-year Treasury note

3.050%

3.064%

-7.46%

-7.72%
30-year Treasury bond

4.216%

4.240%

-4.31%

-3.35%
Currencies











U.S. Dollar Index

74.696

75.018

2.17%

-5.79%
British pound

$1.6455

$1.6483

-1.43%

5.45%
(in U.S. $)











U.S. $ in pounds

£0.608

£0.607

1.45%

-5.17%
Euro in dollars

$1.440

$1.429

-2.81%

7.62%
(in U.S. $)











U.S. $ in euros

€ 0.695

€ 0.700

2.89%

-7.08%
U.S. $ in yen 

81.699

80.930

0.33%

0.41%
U.S. $ in Chinese

6.502

6.479

-0.16%

-1.72%
yuan











Canada dollar

$1.033

$1.024

-2.13%

2.93%
(in U.S. $)











U.S. dollar 

$0.969

$0.976

2.17%

-2.85%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,536.80

$1,537.30

-1.26%

8.12%
(per troy ounce)

 

 





Copper (-HG)

$4.178

$4.186

-0.04%

-6.06%
(per pound)











Silver (-SI)

$38.305

$37.863

-21.18%

23.82%
(per troy ounce)











Wheat (-ZW)

$7.8225

$8.1975

-2.37%

-1.51%
(per bushel)











Corn (-ZC)

$7.4750

$7.5850

-0.86%

20.08%
(per bushel)











Cotton 

$1.5867     $1.5267     0.41%     9.57%
(per pound)











Coffee 

$2.65     $2.64     -11.76%     0.1002079
(per pound)











Crude oil (-CL)

$102.70

$100.59

-9.86%

12.39%
(per barrel)











Most markets were closed Monday for Memorial day.
52Comments
May 31, 2011 1:11PM
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Oil price climbs are always blamed on the weak dollar. One thing I do not understand, even on days when the dollar goes up oil prices still climb. This economy is still so bad and these Wall Street Jackasses keep raising oil prices. I cannot wait for the bottom to fall out of the oil market so these Morons can get their just reward. We have plenty of oil and the demand is not there. We desperately need regulation in this trading.

May 31, 2011 4:40PM
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I see at our local gas station here in the land of lincoln has gone up again today because the barrel went up $2+.  These stations and oil companies are making a killing off of us and it needs to stop.  Took forever for the price to go down, but once the barrel goes up, it goes up the same day.Angry
May 31, 2011 1:46PM
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Thumbs up  lol up then down.  

 

"If my answers frighten you, Vincent, then you should cease asking scary questions."

 

seriously, imho, it is the market manipulation by goldman and the big traders that needs to be controlled - not the ebb and flow of the ppb.

May 31, 2011 2:18PM
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With all the bright minds we have in congress and in the financial community, would someone kindly explain to me why we have $4.00 gal price for gasoline ? Please don't tell me it is an economic issue. The freakin oil in the ground was made by mother nature. It cost $ O to manufacture. So, now we add for the expense to extract the oil from the ground, refine it so we can use it and then transport it to consumers. Going from cost of $0 to $4.00 means that a lot of people are making a lot of money and the public is getting screwed and willing to be screwed since nothing is being done to correct this unbelievable gouging. How can this be such a great democracy when we allow this to happen. My simple tired mind just can't understand why we are fighting in the name of democracy yet live in a feudal society where an aristocracy contols has all the marbles. I truly regret being a WWII and Korean war vet.
May 31, 2011 4:08PM
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CGT1

 

    Who's buying? The government and there pomo? You have to be insane to buy at these way over priced levels. If anyone is manipulating it's the government. Free market my a$$.

May 31, 2011 4:36PM
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Thank you very much you slack jaw, spineless, idiot wall street day traders(Goldman, JP, etc..).  Once again so predictable figuring out your game making  money in these easy markets.  Was it all the bearish market news at the end of last week, or maybe the terrible economic news that came out today that made you want to bully a rally in the markets.  Do you think we would establish a short position, wrong you idiots!

 

If you want to amuse yourself and see who these big investment institutions employ to trade for them, go hit the clubs and fusion restaurant( also a joke) scene on the weekend in N.Y.C..  This my investment friends out there is a sure way to boost your confidence in trading.  Talk about idiots with egos and zero market knowledge.

 

 

May 31, 2011 4:41PM
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The bailout of Greece is like paying off your kids credit card debt..... WIll they learn anything?  The answer is yes!!... They can keep doing what they are doing, because daddy will help........
May 31, 2011 3:10PM
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HOME PRICES  CONTINUE TO FALL     NO " S" SHERLOCK    THEY ARE GOING OFF THE CLIFF!   HERE COMES THE GREAT DEPRESSION  I I        TAKE YOUR MONEY AND RUN !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
May 31, 2011 1:20PM
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Why do people want regulation when prices go up but not when prices go down.
May 31, 2011 5:28PM
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The fed is propping up the market. All of the economic news is pointing to a slow down, "soft patch". When they take the training wheels off watch out! We'll until Wall Street wines and they promise QE3.
May 31, 2011 7:34PM
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So after Greece gets their loans restructured shall we then restructure stabilization loans for  Portugal, Spain and other countries?  While we're at it lets help out Illinois, California, Florida and every other state in the USA.  In fact...let's just keep on printing up the funny money and don't forget, when you pass Go to collect your $200. 

 

There is no fiscal responsibility or accountability left especially in our government.  When I was young, I was taught to work hard, save your money, only buy what you need and could afford etc.  My parents never had a credit card and only paid cash for their cars.  The only debt was a mortgage on our home.  Lessons in frugality and conservatism could go a long way in helping solve much of these economic and personal financial issues.  All the artificially hyped up housing values in the early 2000's did nothing more than serve as personal "piggy banks" for people to go out and buy toys they couldn't afford such as boats, motorcycles, RV's, vacations etc.  When their house values crashed they were stuck with 2nd and 3rd mortgages which were used to finance their "toys" and indulgences.  Lessons learned...

 

 

May 31, 2011 7:21PM
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There is one reason why oil is over $100 a barrel right now and that is Wall Street Greed. These people are living high on the hog while they are burying the rest of the country. We need to have a revolution in this country  and start on WAll Street with the oil traders and speculators and then move on to the White House. Our economy and country are on their way to ruination, courtesy of Wall Street Pigs.
avatar
Greece's problem is not that they spend too much money but that they do not spend enough.

First they have an economy about like Mexico but as they are in the Euro zone they have to charge prices as if they had Germany's economy for everything. Imagine how much more trouble Mexico would be in if their prices for everything was the same as the prices form things in New York City. Heck a lot of American cities would have trouble if things were priced as if you lived in New York City.

Greece should just face up that they have a bad economy and leave the euro zone.

Second their debt is like one day of our (USA) deficit and that is their total debt. Pocket change folks nothing to get worried about.

When the US debt bomb blows up in two years time (Note China was just said they are going to sell 2/3 of it's US T-bills soon and Bernanke is going to quit buying US T-bills so just who is going to buy the US T-bill in two years time???

No one which is why the interest rate on US T-bills are going to be above 12 percent soon. 

That is why Pimco is out of US T-bills the value is going to drop like a rock.
May 31, 2011 4:28PM
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when oil goes up so does the stock market. Right.

May 31, 2011 5:23PM
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stongest manipulated market i have ever seen.maybe we have a strong housing market,5% gdp,5%unemployment,no piigs and i just dont know about it.otherwise wouldnt the market be down?
May 31, 2011 2:20PM
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sell them while you can! Our obamanation is reaching maturity, the bill is coming do!
May 31, 2011 3:14PM
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What exactly is our hope for Greece? Are they some major supplier of something?
May 31, 2011 6:03PM
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Stages late ralley????/Thats funny. Must be the politically correct term for mass emails went out on cell phones and computers to B U Y all at once manipulating the market....worse than insider trading.hahahaha
May 31, 2011 2:21PM
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Thinking mg, your thoughts on this??

 

Washington, D.C. (May 26, 2011)


By Michael Cohn, Accounting Today

House Republicans introduced a 10-page document outlining their "Plan for America's Job Creators Agenda," including lowering the top tax rate for businesses and individuals from 35 to 25 percent and reforming the Tax Code to encourage U.S.-based businesses to repatriate their overseas profits.

 

We understand that it’s important for us—to grow the economy, not just to see Washington grow—to see small businesses flourish,” said House Majority Leader Eric Cantor, R-Va. “Now more than ever, our nation needs small businesses and entrepreneurs to get people back to work.”

 

Democrats, however, countered that the Republican plan would inevitably raise taxes for much of the country.

 

“We need tax reform, not loose talk from Republicans about reducing the top individual rate to 25 percent and creating a $2.9 trillion budget hole in the process that could only be filled by eliminating an array of tax benefits that helped grow the middle class, such as the mortgage interest deduction and the exclusion for employer provided health care,” said Rep. Sander Levin, D-Mich., the ranking Democrat on the House Ways and Means Committee. “Republicans, meanwhile, insist on massive tax cuts for the wealthiest Americans and continuing subsidies for big oil companies.”

 

Rep. Lloyd Doggett, D-Texas, another member of the House Ways and Means Committee, also derided the plan, pointing to a Joint Committee on Taxation estimate that the proposal to repeal the tax on repatriated foreign profits would cost $78.7 billion.

 

“The Republican tax plan is designed to create jobs in China, not in America,” said Doggett. “Profits of companies that move jobs to China would be tax free here, while profits of companies that invest in America would be taxed. And Republicans demand that the cash those corporations have already stashed in tax havens be taxed at a mere 5 percent—representing a windfall for corporate tax dodgers that will cost almost $80 billion. Nor do they specify any of the 'special interest tax breaks,' previously adopted at the urging of these same corporate interests, that they would finally close. Our tax policy should encourage job creation here, not more export of jobs there.”

 

He also noted that the last time a tax holiday on repatriated corporate profits was tried, back in 2004 when corporations were allowed to pay a reduced rate of 5.25 percent, companies used much of the money to buy back their own stock or issue dividends, rather than using the money to create new jobs in the U.S.  The Republican plan noted that $300 billion in profits were returned to the U.S.

 

hmmmmmm ..............

May 31, 2011 3:15PM
avatar
LNKD 82.95Down-5.37 -6.08%
52-Wk High 122.70
52-Wk Low 80.00
OOOOOOOP'S!Don't tell anyoneanyone looking at this over hyped google, i mean linked company??
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