Stocks Gain, as EU Hopes Spur a late Bid (AAPL, AMZN, BAC, BTU, C, FSLR, HAL, JNPR, JPM, MU, NFLX, TLB, XLF)

Published on Wednesday, 07 December 2011 17:28 Written by Christopher Lynn

New York, December 7^th (TradersHuddle.com) – Stocks closed higher after a late bid hit the market following a report that the G20 was considering a $600 billion IMF loan program facility for Europe, which will increase EU leaders options to tackle the debt crisis in the region. The IMF denied the report, but still shares were able to close in positive territory. Participants had been trading cautiously ahead of the EU summit and ECB meeting.

The Dow Jones Industrial Average gained 46.24 points, or 0.38%. The S&P 500 index climbed 2.54 points, or 0.2%, while the NASDAQ fell less than 1 point, or 0.01%.

The market started with modest losses following mixed news out of Europe, with UK manufacturing and production data coming below expectations, while Portugal held a successful bond auction. Optimism ahead of the EU summit was being offset by caution ahead of tomorrow’s ECB meeting. Retail was in focus in pre-market after struggling retailer Talbots (NYSE:TLB) surged 80% after the company received an unsolicited letter from Sycamore Partners proposing to acquire all outstanding common stock for $3.00 per share.

And Martha Stewart Living (NYSE: MSO) shares gapped up 25% on news the company has reached a strategic alliance venture with J.C. Penney (NYSE:JCP), where both the company will work together to innovate a unique and comprehensive retail experience featuring Martha Stewart products, know-how and advice, within J.C. Penny stores.

In Europe, markets closed lower after paring earlier gains, as participants turned cautious ahead of the EU summit and ECB meeting. Reports out of Germany, citing a top level official in a more negative tone over the prospects of the Summit yielding bold measures to tackle the debt crisis, weighed on sentiment. Shares had been resuming their rally earlier on optimism on the EU summit and dismissing the weak UK manufacturing and production data points.

Both once again reports during the late trading session helped the market spike up, enough to push the Dow and the S&P 500 to green territory, while the NASDAQ moved towards the unchanged line. According with a news report from Nikkei, the G20 is considering a $600 billion IMF loan program to Europe, which will help boost the firepower to contain the debt crisis in the region. Participants focused on the IMF lending possibility and shrugged off news that S&P placed its triple-A credit rating on the EU and some of the largest rated European banks on credit watch negative, following yesterday’s downgrade warning to 15 of the 17 nations in the euro zone.

Most of the Select S&P 500 sectors closed with gains, with financials, healthcare, and consumer discretionary posting the biggest advances, while energy and industrials fell. Financials received a strong bid, with the Financial Sector SPDR ETF (NYSE:XLF) jumping more than 1% and financial components in the Dow posting the biggest gains.

JPMorgan (NYSE:JPM) turned higher, closing with a 2.32% gain at $34 after the company’s CEO Jamie Dimon said at the Goldman Sachs Financial Services Conference that the bank expects a modest dividend increase next year and it is financially strong to buy back another $1 billion in shares despite expecting fourth-quarter investment bank revenue to be flat. Rival Bank of America (NYSE:BAC) gained 1.90% to $5.89 after trading as high as $5.92. The optimism over Europe finding a way to tackle the debt crisis also helped the space. BofA’s CEO Brian Moynihan also said in the same conference yesterday that the company’s investment banking results have improved from the third quarter, in which trading revenue dropped to $1.07 billion.

The Travelers Companies (NYSE:TRV), the property and casualty insurer, also helped the Dow and the sector, as it gained 1.75% to $55.90 after analyst at Credit Suisse started coverage on the stock with an Outperform rating.

Citigroup (NYSE:C) edged higher to $29.83 after trading as low as $28.72. The company announced late yesterday that it would be cutting 4,500 jobs of its global workforce of about 267,000 employees. The lender said at the Goldman Sachs Financial Services Conference that it would take a $400 million charge this quarter to account severance and other expenses related to the layoffs.

On the flip side, the energy sector fell weighed down by bearish crude oil weekly inventory data. Halliburton (NYSE:HAL) tumbled 6.1% to $33.40, extending its decline from the prior session, as the company responded to BP’s accusations that it had destroyed documents related to the test results of the cement work it perform at the Deep Horizon rig in the Macondo well, which later caused the biggest oil spill in U.S. history back in 2010. The company called the accusations mischaracterizations.

Peabody Energy (NYSE:BTU), the coal producer with worldwide operations, was also under pressure in the session. The stock tumbled 3.37% to $36.95 after it was downgraded to a Neutral from Buy at Goldman Sachs and after it announced that Announced that it acquired 5.1% equity interest in Winsway Coking Coal Holdings.

Consumer discretionary saw a bid, with Netflix (NASDAQ:NFLX), the video rental subscription service, rebounding sharply from the prior session. Netflix rallied 5.61% to $71.96, as the company unveiled a new Xbox 360 experience, expanding Xbox support to Latin America. The stock also moved to the upside amid news that the House of Representatives passed an amended Video Privacy Protection Act.

Also in the space, Amazon (NASDAQ:AMZN), the largest online retailer, jumped 1.73% to $195.32, as Cannacord Genuity initiated its coverage on the stock with a Hold and a target price of $225 per share. Amazon is increasing the ante of its fight with brick and mortar retailers, as its developing an App that will let consumers not only comparison shop with their smartphones at the retailer but also offer them a $5 coupon if they leave the store without buying the item.

In the tech space, Micron Technology (NASDAQ:MU), the dynamic random access memory chips maker, was the top performer not only of the sector but also for the broad market index. Micron surged 7.26% to $6.06. Earlier in the week, Nomura initiated its coverage on the stock with a Neutral.

First Solar (NASDAQ:FSLR), the largest maker of thin film solar modules in the world, rallied 4.08% to $47.99 after a unit of Warren Buffett’s Berkshire Hathaway, Mid American Energy Holdings, announced that it had agreed to buy First Solar’s $2 billion Topaz solar farm project in California, one of the biggest solar projects in the world.

Apple (NASDAQ:AAPL), the maker of iPads and iPhones, slid 0.48% to $3898.09, closing below its 50day moving average. The company fell despite Cannnacord Genuity bumping its iPhone shipment estimates to 30.5 million units, as its checks indicate strong global iPhone sales with Apple gaining share against Android in both the U.S. and Western Europe. The firm however cut its view of the iPad, saying it expects 13 million units to be sold in the holiday quarter, down from 14 million it previously expected.  The firm said that the lower numbers come as inventory is being drained on expectations of a new iPad in March and increased competition in the low-end side from Amazon’s Kindle Fire. Sterne Agee reiterated its Buy rating and target price of $500 per share, however shares were not able to generate a bid, perhaps weighed down by news that a Chinese court rejected Apple’s claim over the iPad name in China, which could potentially derail the sales of the device in the country. Apple is in a legal fight with Proview Technology over the iPad trademark, as the Taiwanese company registered the trademark long before Apple made a splash in the tablet market.

And Juniper Networks (NASDAQ:JNPR), the provider of Internet infrastructure solutions, tumbled 6.21% to $21.31; logging the biggest percentage decline in the sector and the S&P 500 Index.