Dow up 153; stocks' best 4-day run in a year
The Chicago PMI report cheers investors, who are hoping the economy's soft patch is firming up. Greece's parliament approves austerity legislation. Could Hewlett-Packard be broken up? Oil and gold fall.
Updated: 7:58 p.m. ETStocks were jumping for the fourth day in a row, thanks to a better-than-expected measure of U.S. business activity and approval of a bailout plan by Greece's parliament.
The week's rally was powerful enough that the Dow Jones industrials ($INDU) and the Standard & Poor's 500 Index ($INX) enjoyed their best four-day performances since July 2010. The four-day run for the Nasdaq Composite Index ($COMPX) is its best since June 2010.
The day's economic reports suggest that the economic soft patch that began in April and May could be ending. The slowing was started in part when Japan's March earthquake disrupted manufacturing in Japan, the United States and elsewhere.
Light sweet crude oil (CL) was higher on the rally; gold (-GC) was lower.
The Dow closed up 153 points, or 1.3%, to 12,414; the blue chips had been up as many as 166 points. The S&P 500 added 13 points, or 1%, to 1,321, and the Nasdaq was up 33 points, or 1.2%, to 2,774. The Nasdaq-100 Index ($NDX.X), closely watched because it represents large Nasdaq stocks, was up 31 points, or 1.3%, to 2,325.
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Today's rally marked a bullish end to a volatile second quarter, with the Dow actually showing a 0.8% gain for the three months and the S&P 500 off 0.4% and the Nasdaq off 0.3%. On April 29, the market's peak close for the year so far, the Dow had gained 4% in the quarter. On June 15, the gain had disappeared, with the index down 3.4%.
The market ended June lower. The Dow was off 1.2%, with the S&P 500 down 1.8% and the Nasdaq down 2.2%.
Here's the good news: Despite all the volatility, the Dow is up 7.2% for the year, with the S&P 500 up 5% and the Nasdaq up 4.6%.
Friday's market will be dominated by the Institute for Supply Management's June manufacturing report and by auto makers' June sales reports. IHS Global Insight was expecting the ISM reading to come in at 50, meaning the economy is stuck in neutral. Today's Chicago Purchasing Managers Index report may mean the number will come in a bit bigger.
Most analysts see auto sales rising 2% to 3% from May and 11% from a year ago as supply issues ease.
Futures trading suggests a flat open.
After today's close, Darden Restaurants (DRI) were off 1.5% to $49 after the company's guidance for its 2012 fiscal year was a tad lower than expected. Its fiscal fourth-quarter earnings were up 19% from a year ago. Darden runs the Olive Garden, Red Lobster and LongHorn Steakhouse chains.
Shares of for-profit college operator Apollo Group (APOL) were off 1.3% to $43.13 after hours despite beating Street estimates on fiscal-third quarter earnings.
It wasn't clear how market would react to news that Treasury Secretary Timothy Geithner may leave his post after the debt-ceiling limit question is resolved.
Greece pleases the markets, for now
The market was cheered that the Greek parliament supported a European bailout plan that may result in Greece's gross domestic product falling as much as 15%. At the same time, German banks pledged support for the nation.
Greek Prime Minister George Papandreou won enough support in Parliament today to pass a second piece of legislation that will implement measures ranging from tax increases to asset sales. Street violence marred his victory Wednesday on a bill setting out a strategy for austerity in the next five years, part of a package that is a condition of European Union aid.
What's not clear is how long Greece can continue with regular crises. It is expected to run out of cash again within three to six months.
Former Federal Reserve Chairman Alan Greenspan doesn't see Greece avoiding a default on its debt unless the 17 eurozone countries consolidate fiscal management. Politically, however, Greenspan doesn't see that happening.
Pushing the Dow and helping technology shares move higher was Hewlett-Packard (HPQ). Shares jumped as much as 4.8% before falling back to $36.40, up 2.4%. That was third among the 30 Dow stocks, behind Intel (INTC), up 3.6% to $22.16, and Caterpillar (CAT), up 3% to $106.46.
Shares jumped on a report that a group of giant buyout firms -- Blackstone (BX), Kohlberg, Kravis Roberts and TPG Capital -- would like to break up HP. It's not clear that a formal offer was made to HP, but the company was aware of it and said it wasn't interested.
What prompted the sniffing was this: After top management changes in the last year and back-to-back cuts in revenue growth forecasts, HP is vulnerable. And speculation has grown that HP's computing, printing and enterprise services businesses could be worth more apart than the current $72 billion market capitalization.
Chicago PMI report and jobless claims help the market
The big forces pushing the market higher were the Chicago Purchasing Managers Index, which moved up to 61.1 when most economists expected a decline. A reading of 50 or higher signals economic growth.
Production and new orders accelerated while price increases eased somewhat. Lead times for capital equipment lengthened.
The report suggests that the manufacturing sector in the Midwest is still fairly vibrant. The Institute for Supply Management's national manufacturing report is due Friday, along with a report on U.S. auto sales.
Separately, the Kansas City Federal Reserve Bank's June manufacturing index jumped to 14 from 1 in May. Its production index rose to 2 from minus-22, and its employment index also moved higher. Producers are generally optimistic about future activity. Raw-materials price indexes fell for the second straight month, but more producers say they plan to raise selling prices in the months ahead.
Meanwhile, jobless claims fell by 1,000 to 428,000 in the week ended June 25, the Labor Department said. Economists had expected a slightly larger drop, but the decline cheered investors. The number of people on unemployment benefit rolls and those getting extended payments declined.
| Energy prices -- New York close | ||||||||||||
| Thur. | Wed. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $95.42 | $94.77 | -7.09% | 4.42% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $2.9463 | $2.9347 | -3.49% | 15.83% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $4.3740 | $4.3150 | -6.26% | -0.70% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $2.9692 | $2.9349 | -5.75% | 21.03% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $112.48 | $112.40 | -3.64% | 18.71% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.5410 | $3.5430 | -6.32% | 15.27% | ||||||||
| (per gallon; AAA) | ||||||||||||
Crude oil moves lower; interest rates rise
Crude oil jumped as high as $95.82 a barrel before profit-taking hit the market. Crude settled at $95.42, up 65 cents at 2:15 p.m. ET. Brent crude was down 28 cents to $112.12.
Gold settled down $7.60 to $1,502.80 an ounce. Silver (-SI) was up 6.3 cents to $34.83 an ounce. Copper (-HG) rose 5.85 cents to $4.2825 a pound.
The dollar was lower against the euro and the British pound. That pushed up interest rates. The 10-year Treasury yield was up to 3.158% from Wednesday's 3.108% and 2.871% on Friday.
Part of the yield gain was due to the stock market's pulling cash out of bonds. Another factor was the end of the Federal Reserve's program to buy Treasury securities. The program pushed bond yields lower.
Corn and wheat prices were sharply lower after an Agriculture Department report showing plantings much larger than expected. Corn (-ZC) was off 69 cents, or 9.9%, to $6.29 a bushel. Wheat (-ZW) fell 56.5 cents, or 8.8%, to $5.85 a bushel.
A broad rally -- but volume was weak
Twenty-six of the 30 Dow stocks were higher, led by Intel, Caterpillar, Hewlett-Packard and United Technologies (UTX), up 2.4% to $88.51. Caterpillar contributed 23 points to the Dow's gain by itself.
The laggards were Bank of America (BAC), Travelers Companies (TRV), Pfizer (PFE) and McDonald's (MCD).
In addition, 83 Nasdaq-100 stocks were higher, led by construction-equipment maker Joy Global (JOYG), up 5.7% to $95.24, networking equipment maker NetApp (NTAP), up 5.6% to $52.78. Auction house EBay (EBAY) was third, up 4.6% to $32.27.
Joy Global moved up with Caterpillar. Both do extensive business outside the United States.
Streetinsider.com reported that NetApp set fiscal 2012 guidance at $2.46 to $2.64 a share. The Street estimate had been $2.48. EBay was up because its PayPal service is expected to benefit from new swipe fees projected for debit cards.
A total of 420 S&P 500 stocks are higher, led by Joy Global, NetApp and eBay.
Volume was light, with fewer than 1 billion shares traded on the New York Stock Exchange and 1.9 billion shares traded on Nasdaq.
The agony of Countrywide for Bank of America
Bank of America was off 1.6% to $10.96 as the cheer of its mortgage settlement announced Wednesday faded under the weight of the costs from the company's ill-fated merger with Countrywide Financial.
The acquisition cost was $2.5 billion, but the Bank of America's real estate division has absorbed more than $17 billion in losses.
"It turned out to be the worst decision we ever made," a Bank of America director who voted to approve the deal told The Wall Street Journal.
It's clobbered the stock price. Shares are down 6.4% in June and 17.5% for the quarter and the year.
| Short hits from the markets -- New York close | ||||||||||||
| Thur. | Wed. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.020% | 0.020% | -60.00% | -83.33% | ||||||||
| 5-year Treasury note | 1.744% | 1.693% | 3.32% | -13.49% | ||||||||
| 10-year Treasury note | 3.143% | 3.108% | 3.05% | -4.90% | ||||||||
| 30-year Treasury bond | 4.375% | 4.371% | 3.77% | 0.30% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 74.635 | 75.074 | -0.08% | -5.87% | ||||||||
| British pound | $1.6085 | $1.6069 | -2.33% | 3.07% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.6217 | £0.6223 | 2.39% | -2.98% | ||||||||
| Euro in dollars | $1.4529 | $1.4440 | 0.65% | 8.59% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.6883 | € 0.6925 | -0.65% | -7.91% | ||||||||
| U.S. $ in yen | 80.78 | 80.78 | -1.05% | -0.73% | ||||||||
| U.S. $ in Chinese | 6.49 | 6.46 | -0.21% | -1.93% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $1.038 | $1.031 | 0.34% | 3.41% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $0.964 | $0.970 | 1.86% | -3.30% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,502.80 | $1,510.40 | -2.21% | 5.73% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $4.2825 | $4.2240 | 2.51% | -3.70% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $34.8320 | $34.7690 | -9.07% | 12.59% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $5.8475 | $6.4125 | -25.25% | -26.38% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $6.2900 | $6.9800 | -15.85% | 1.04% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $1.5979 | $1.6214 | 0.71% | 10.34% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $2.6535 | $2.6025 | 0.28% | 10.33% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $95.42 | $94.77 | -7.09% | 4.42% | ||||||||
| (per barrel) | ||||||||||||
Stocks shoot higher on hopes of 'soft patch' is ending
I find it quite scary that even a layman like myself can see what the truth is. Our markets are based on hope?? Not facts?? Investing on 'hope' has no place in reality. Thing are NOT good - the deficit, the out of control spending, the housing market, the unemployment, the corruption on Wall Street and the elistist w@nkers in DC who have the 'Let them eat cake.' mentality.
My grandmother may have not had the best education, but she was a helluva' lot smarter than most of the 'financial advisers' on Wall Street. Live within your means, don't spend more than you take in, and always save some. If our government had done this, and not given into its insatiable greed, this country would be a lot better off.
Markets are up on HOPE. Indeed! Why don't they just tell the truth? The gamblers have seen an opening to make a few more bucks. What the heck, it isn't their money anyway.
Unless there is a forced return (punitive if necessary) to sound investment fundamentals, this nations economy will remain in the tank. Unless something is done about reinvesting some of the profits in some jobs, the national debt will grow, in spite of what the repubs think. What you are now seeing in Greece (riots)will be happening in this country next year, only 10 times worse.
Why the huge investment in "Homeland Security"? Because the political class knows they will need it to protect THEM when the citizens finally say enough. Until the "investor class" realizes that they actually need someone to BUY things, they will care little about the un and under employed. Welcome to a return to 1929.
I know I'll take a bunch of shots on this, but this is exactly the way I see things.
GREED ruined the economy to start with. GREED is what is preventing a meaningful recovery at the worker level. GREED is what the Repubs (and quite a few Dems) have been paid to protect.
By the people, for the people was removed from the Constitution with the election of Reagan and has been continued since.
havasu46,
The truth and Congress is not compatible. Your right if somebody told the American people the truth about our current fiscal situation they would never get elected. I would say that a majority of the American people, mabye even a vast majority, still believe there is a
SS and Medicare trust fund. Trust my a--.
GM - It would seem that since Congress already passed the legislation to spend the money it really doesn't make sense that they can hold the Treasury hostage for doing their job of managing the country's finances and paying the resulting bills. Congress is just grand standing and selling their votes twice to the same constituents. We need to dump everyone of the lying lawyers and elect some real business and financial managers. Of course, it those running for election told the public the truth about what we could and couldn't afford they'd never get elected. Why wouldn't the stock market be high! High gas prices, high unemployment, plummeting housing market, and Congress trying to figure out if we should raise the debt limit again. Oh wait Greece parliament decided on a bailout so that must be why it is shooting up?
The stock market is a joke. I have never seen such a false high. When it crashes it is going to crash hard. It is at a false high just like housing was in 2006.
Hedonist13: I find it quite scary that even a layman like myself can see what the truth is. Our markets are based on hope?? Not facts?? Investing on 'hope' has no place in reality.
Yep hope. That's the way the stock market system has generally always been based on, that and the bond market. Even insurance companies. And banks. Basically capitalism works this way.
- Banks hope you pay back your loan on time and with the interest.
- Insurance companies are making a bet on you hoping you don't get sick, car crash, get robbed, etc.
- Retailers hope they will sale their merchandise before it goes bad or is obsolete
- We hope we get par and interest on bonds at least, and that the stock will be better tomorrow due to business being better
- Business of all sorts hope demand will stronger at some point in the future.
All capital economies are based primarly on hope, as there are no guarantees in such a system. I guess you could have a feudal, cast, mercantile, or communist system... sure whatever floats your boat, there you'll know exactly what to expect and hope has nothing to do with it then.
By the way, I get your point. Hope being a pretty flimsy approach with not enough real data backing up their hope at present.
That's why the stock market is a very shady area for planning your retirement based on-- always has been its just had a lucky 60 year run. You should use several other methods to invest. And right now, I wouldn't put a penny in this casino! To think, right wing nuts wanted social security to be dumped into all of this stock hopeful thinking, defeating the entire purpose of the security behind social security. Same reason their supply side economics is insane. There's very few businesses that depend on business to business sales to drive their primary revenue. Consumers, or the demand side carries the day. Even Bush Snr said it right, supply side economics is voodoo economics, they expect demand to just magically appear. That's just like me making a bunch of pianos and hoping people will decide to buy a piano just because its there. It doesn't work, you have to have specific demand from the consumer, only then, does supply catch up. Wages flat never really increasing say a tid bit, and supply running amuck. There you go. A wonderful economy. At the same time oil demand really has gotten out of hand, with dwindling supplies. We got an interesting decade to 2 decades ahead.
MP10
Texas has oil and a far smaller population. Their color is GREEN.
California has signicantly higher population. They have welfare programs for all of the ill...er..mex. um..
hmm.
Now what is the Policitally correct term we are supposed to call them again? I wouldn't want to OFFEND anyone by saying the wrong words.
Oh hell. BE OFFENDED.
Illegal Immigrants leeching services paid for by the state (i.e. citizens). They are seeing RED, but not the RED you or I are thinking...
I wonder what economic plan works better.....conservative or liberal?
Well Texas has added more jobs than all states combined this year and they have low taxes....
Well then there is California which is in the worst financial position of any state.
Does anybody know which one of those is red or blue?
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