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.

By Charley Blaine Jun 30, 2011 12:58PM
Charley BlaineUpdated: 7:58 p.m. ET

Stocks 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.

Article continues below.

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.


Could Hewlett-Packard be broken up?
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.Hewlett-Packard

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)










 

63Comments
Jun 30, 2011 2:43PM
avatar
I like the euphemism "soft patch". My wife was laid off from our local newspaper 3 years ago and hasn't worked since. The help wanted section is a joke consisting of less than a column. We common folks know what is and what isn't. Just tired of having my intelligence insulted on a daily basis by a bought and paid for, lap dog press. "Soft patch"? KISS MY A_S!
Jun 30, 2011 2:21PM
avatar
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.

Jun 30, 2011 3:01PM
avatar
A wise old professor told us in a management class I had in college many years ago that the starting formula for a country digging itself out of a hole is good, sound government that uses common sense, and sticks to basic fundamentals and principles. Boy are we SCREWED!!!!
Jun 30, 2011 2:48PM
avatar

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.

Jun 30, 2011 4:59PM
avatar
Alan Greenspan is the worst Fed Chairman in the last 100 years. He was responsible for two market crashes, blocking the regulation of derivatives (which nearly led to the destruction of our economy) and supported  the repeal of the Glass Stegall Act in 1999 which kept the banks out of the stock market for 60 years (and kept us from having depression during that time). If Alan Greenspan says its white I will look at black to invest in. Greece produces nothing yet its people act like they deserve the wealth of industrialized countries. When Greece produces something other than oil oil and Ouzo then they will begin to prosper. Since that is not likely,  look for another Greek financial crisis within 12 months.
Jun 30, 2011 3:43PM
avatar
How can stocks go up on hopes? It sounds dumb to me. They should be legitimate, or you will be losing money. Just give me the facts, not hopes.
Jun 30, 2011 1:44PM
avatar
Why don't we stop manipulating the interest rates and let the market float to its reality level. Those who like equity can stay in equity, those like cash can stay in cash, etc. Some where along the way all this manipulation is going to go off track again. I'm concerned we have lost our way already and reality is not a viable option anymore. I feel we have reach  a point where we have to manipulate, manipulation.
Jun 30, 2011 4:22PM
avatar

"Meanwhile, jobless claims fell by 1,000 to 428,000 in the week ended June 25, the Labor Department said."

 

That's enough for me to celebrate, and buy Michael Milken lunch in Manhattan. Beer mug

Jun 30, 2011 4:34PM
avatar
So let's get this straight, Greece approves a plan to financially rape their already multiple times raped citizens again, with Spain and Portugal, and YES America, soon to follow...we gain 1,000 jobs at Mcdonalds and Burger King, and manufacturing in Chicago is up.!!! WHO HOO what a GREAT reason to celebrate.!!!...Who knows, maybe next week there will be a manufacturing "boost" in Tucumcari, and subway may add another 500 jobs...we should have another HUGE run then as well...right?
Jun 30, 2011 5:15PM
avatar
Love the horse and donkey soft patch definition, otherwise most of the ramblings here lead me to believe these people are horrible investors, too much emotion and ignorance. Those that don't learn from history are doomed to repeat it.  Diversify and have reasonable expectations.
Jun 30, 2011 6:28PM
avatar
This market is a joke.  Millions are unemployed here.  Oil is abundant and coming out of our ears.  Yet, it keeps going up in price.  Large businesses are creating profits through expense cuts and accounting tricks, not more sales.  This market is all smoke and mirrors getting ready for the big fall once again.  Will we ever learn?
Jun 30, 2011 4:55PM
avatar

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--.

Jun 30, 2011 7:04PM
avatar
Who's spending money in our economy?  The top 5% only contributes 14% to consumer spending.  The lower 95% aren't getting raises and 77% of new jobs pay $7.25/hr-$15/hr.  Add the fact that nearly 20% of all income is going to health care now and where are the dollars left to buy things?  Either the redistribution of wealth to the rich must be reversed or everyone -including the rich- will lose in the long run.
Jun 30, 2011 3:49PM
avatar
Smile 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.  
Jun 30, 2011 4:20PM
avatar

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.

Jun 30, 2011 3:37PM
avatar
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.

Jun 30, 2011 4:43PM
avatar

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...

 

Jun 30, 2011 3:32PM
avatar

OK, a new catch phrase to explain a weak economy, "soft patch".  Lets hope the market and

the economy doesn't sink in that "soft patch".  Maybe we should wait and see how soft

if gets next week. 

Jun 30, 2011 4:35PM
avatar

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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