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Title: Dow Poised for Best Month Since October on Europe Pact
Source:
Bloomberg
URL Source: http://www.bloomberg.com/news/2012- ... -deal-to-stem-debt-crisis.html
Published: Jun 29, 2012
Author: Rita Nazareth and Julia Leite
Post Date: 2012-06-29 12:38:44 by Brian S
Keywords: None
Views: 84
Comments: 2
U.S. stocks joined a global advance, sending the Dow Jones Industrial Average toward the biggest monthly rally since October, after European leaders reached an agreement that alleviated concern banks will fail. All 10 groups in the Standard & Poor’s 500 Index rose as industrial, technology and energy shares had the biggest gains. Citigroup Inc. (C) and Bank of America Corp. (BAC) rallied at least 2.8 percent as European lenders surged. Alcoa Inc. (AA) and Exxon Mobil Corp. added more than 1.7 percent as commodities jumped. KB Home (KBH) climbed 6.7 percent as the homebuilder reported a narrower loss. Nike Inc. (NKE) tumbled 8 after profit unexpectedly declined. The S&P 500 (SPX) jumped 1.9 percent to 1,354.51 at 11:55 a.m. New York time. It has rallied 3.4 percent in June. The Dow added 219.18 points, or 1.7 percent, to 12,821.44 today, extending its monthly gain to 3.5 percent. Trading in S&P 500 companies was up 15 percent from the 30-day average at this time of day. “We are getting a pretty nice relief rally,” Christopher Orndorff, who helps oversee $450 billion as senior portfolio manager at Western Asset Management Company in Pasadena, California, said in a telephone interview today. The European agreement “appears to be a step in the right direction in terms of solving the problem from a longer term perspective.” Global stocks gained as European leaders agreed to relax conditions on emergency loans for Spanish banks and possible help for Italy as an outflanked German Chancellor Angela Merkel gave in on expanded steps to stem the debt crisis. More than $1 trillion was erased from U.S. equity values this quarter amid concern about a worsening of Europe’s debt crisis and a global slowdown. The S&P 500 tumbled 5.6 percent through yesterday, led by technology and financial shares. Pacific Investment Management Co.’s Bill Gross said a “debt trap” remains in place even after European leaders reached an agreement that alleviated concern the region’s banks will fail. Pimco continues to avoid the debt of nations including Spain and Portugal in favor of U.S. Treasuries and mortgage securities, Gross, who runs the world’s biggest bond fund, said in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. U.S. stocks rallied even after data showed U.S. consumer spending stalled in May. Separately, the Thomson Reuters/University of Michigan final index of sentiment fell to 73.2 in June from 79.3 at the end of last month. The Morgan Stanley Cyclical Index (CYC) of companies most-tied to the economy jumped 2 percent. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against S&P 500 losses, tumbled 8.3 percent to 18.07, extending its monthly plunge to 25 percent. The KBW Bank Index rallied 2 percent as a measure of European lenders added 4.1 percent. Bank of America climbed 3.5 percent to $8.01. Citigroup increased 2.8 percent to $27.14. Energy and raw material producers advanced as the S&P GSCI Spot Index of 24 raw materials rose as much as 3.9 percent to 589.51 points, poised for the biggest closing gain since Sept. 30, 2009. Alcoa, the first company in the Dow to report quarterly results on July 9, added 1.7 percent to $8.66. Exxon increased 2 percent to $84.74. A measure of homebuilders in S&P indexes jumped 3.3 percent, to the highest level since 2008. KB Home climbed 6.7 percent to $9.28 as the company sold more houses at higher prices during its fiscal second quarter ended May 31. Constellation Brands Inc. (STZ) surged 23 percent to $26.87 after agreeing to buy the other half of its Crown Imports joint venture with Grupo Modelo SAB (GMODELOC) for about $1.85 billion, becoming the sole U.S. importer of top-selling Corona beer. ValueClick Inc. (VCLK) added 15 percent to $16.23. The Internet- advertising company said second-quarter revenue was probably at the higher end of its forecast range. Nike, the world’s largest sporting-goods company, tumbled 8 percent to $89.16. Chief Executive Officer Mark Parker responded to higher costs by introducing widespread price increases in January to improve Nike’s gross profit margin, which narrowed for the sixth straight quarter. The company’s sales also slowed in Europe. Ford Motor Co. (F) slumped 4.5 percent to $9.64. The second- largest U.S. automaker said its pretax operating profit will be “substantially lower” in the second quarter in part because overseas losses tripled from the year’s first three months. Research In Motion Ltd. (RIMM) plunged 18 percent to $7.47 after posting a loss and delaying the next BlackBerry operating system, increasing pressure on the company to find an acquirer. The Waterloo, Ontario-based smartphone maker also said it would cut 5,000 jobs. Initial public offerings fell 34 percent this quarter as Facebook Inc. (FB)’s disappointing debut and worsening economic conditions rattled investors, pressuring companies to lure buyers with cheaper valuations. IPOs globally raised $41.3 billion, the worst second quarter since 2009, Bloomberg data show. That compared with $62.7 billion a year ago. At least 50 companies shelved sales as Europe’s debt crisis spread, growth prospects slowed in China and Facebook’s stock sank 17 percent from its May 17 IPO price. “With the economy and with Europe, there are more questions than answers in investors’ minds, and they want some clarity before they put their money down,” said Matt McCormick, who helps oversee $6.2 billion at Cincinnati-based Bahl & Gaynor Inc. “After what happened with Facebook, people want IPOs to go off without a hitch.” Coty Inc., the perfume maker that pulled a takeover offer for Avon Products Inc. (AVP), filed for an initial public offering seeking as much as $700 million. All the shares in the IPO will be offered by existing shareholders, the company said in a filing today. Coty, based in New York, withdrew its sweetened $10.7 billion offer for Avon on May 15, citing the cosmetics seller’s refusal to negotiate. The company hired Bank of America Corp., JPMorgan Chase & Co. and Morgan Stanley to help manage its share sale, it said.
‘Debt Trap’
Banks Rally
Revenue Forecast
Rattled Investors
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2007? Cheap bastard...buy the newest edition, you are missing out.
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