Positive news on European debt crisis lifts stock market
By The Associated Press
Published: Tuesday, June 28, 2011,
Signs that a widespread European debt crisis could be averted helped send stocks up on Monday.
French banks agreed to accept slower repayment of Greece's debt, giving Greece more time to meet its other financial obligations. French banks hold $21.3 billion in Greek government debt.
Greek lawmakers began to debate more budget-cutting measures. Greece's parliament needs to pass the new austerity plan this week before the country can receive a $17 billion installment from a rescue package arranged last year.
Washington, meanwhile, said that spending by consumers decreased in May, after adjusting for inflation. April's figures also were revised downward, revealing the first decline since January 2010. Consumer spending accounts for 70 percent of economic activity.
Gas prices nearing $4 per gallon in late April and early May curtailed spending on retail goods such as televisions and clothes. Since then, gas prices have fallen to a national average of $3.57 per gallon. Oil prices have declined steeply during the past few weeks, which eventually should translate into even lower pump prices. Analysts say lower gas prices could help boost consumer spending in other areas in the coming months.
The Dow Jones industrial average rose 108.98 points, or 0.9 percent, to close at 12,043.56. The Standard & Poor's 500 index rose 11.65, or 0.9 percent, to 1,280.10. The Nasdaq composite index rose 35.39, or 1.3 percent, to 2,688.28.
Analysts said the rally was stronger than the economic news would suggest in part because many traders invest when indices hit certain pre-determined price levels.
In this case, the key number is 1,257 -- the S&P's break-even figure for the year, said Todd Salamone, director of research at Schaeffer's Investment Research. The S&P approached that level in March and again earlier this month. Both times, the market rallied as so-called technical traders poured into the market.
The Monday-morning rally was driven by "a combination of trading on that (break-even) level and a catalyst, the situation in Europe," Salamone said. "Whether we sustain it is another question."
Stocks rose broadly. All 10 industry groups in the S&P were higher, with financials, information technology and retail stocks showing the strongest gains.
Amazon.com Inc. rose 4.5 percent to $201.25, making it the top-performing company in the S&P 500. Morgan Stanley analysts said the online retailer should benefit from expanding international sales in places like Japan and Germany, where densely populated cities leave little room for large low-price retail stores.
Shares of electronics maker Molex Inc. fell 4 percent, the most in the S&P, after analysts with Ticonderoga Securities downgraded the stock to "sell" from "neutral." They said the slow economy has hurt demand for tech gadgets like the smart phones that Molex manufactures.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.