Stocks Close Higher on Greek Deal Optimism

Published on Tuesday, 07 February 2012 19:15 Written by Christopher Lynn

New York, February 7^th (TradersHuddle.com) – Stocks were able to find support and move to the upside, with the NASDAQ hitting an 11-year high amid hopes that a deal for Greece to access new bailout funds was near, easing worries over the potential of a disorderly default.

The Dow Jones Industrial Average gained 33.07 points, or 0.26%. The S&P 500 index added 2.72 points, or 0.20%, while the NASDAQ climbed 2.09 points, or 0.07%.

The market started once again under modest downward pressure as trading in Europe weighed on sentiment. The increased uncertainty over the Greece bailout deal, spurred jitters over a disorderly default, which could derail progress made in trying to solver, the debt crisis in the region. Solid earnings reports from Coca-Cola (NYSE: KO) and Yum Brands (NYSE: YUM) supported futures, while poor results from UBS in Europe weighed on banks.

In Europe, equity markets pared earlier losses to close mixed, amid the lack of a deal for Greece to access bailout funds. Greek leaders were locked in crunch talks to secure a fresh bailout package and avoid a messy default. Shares of UBS (NYSE: UBS) closed lower by 0.7% in European trading, as its results missed forecasts due to a drop in trading and advisory income.

The early weakness attracted buyers, which coupled with growing optimism that a Greek bailout deal was near, amid numerous rumors circulating around the trading desk, helped stocks move higher, with the NASDAQ able to hit an 11-year high.

Among the S&P 500 sectors, utilities, energy, and consumer discretionary posted the biggest gains, while materials, industrials, and financials closed with modest losses.

Shares of DTE Energy (NYSE: DTE) jumped more than 2%, posting the biggest gains in the Utilities sector and helping the Utilities SPDR ETF (NYSE: XLU) gain 0.72%, which was the biggest gain amid the S&P select sectors.

Meanwhile energy received a lift from higher crude oil prices after the Iranian threats and ongoing unrest in the Middle East spurred a move higher in the commodity. Speculation that Greece was edging closer to deal to access new funds also boosted oil to close at $98.48 per barrel. In addition the oil pits also received support from an increased in global demand forecasts by the U.S. Energy Information Administration.

The sector benefited from the performance of big oil and stocks like Anadarko Petroleum (NYSE: APC), which surged 5.24% to a new 52-week high on volume that was better than double the daily average, while it posted the biggest gain in the sector. The largest U.S. independent oil and gas producer reported fourth-quarter earnings Monday after the close, helping Anadarko broke through critical resistance at $85.

Also helping the sector to the upside was Tesoro (NYSE: TSO). The San Antonio, TX based crude oil refiner climbed 4.8% to $27 after the spread between Brent and WTI surged to its highest level since October 2011 earlier in the session. The company is scheduled to present at the Credit Suisse Energy Summit later in the week.

Also in the space, BP (NYSE: BP), Europe’s second-largest oil company, fell after its earnings report. BP raised its dividend to eight cents a share from seven cents, while it said year-over-year production fell 5%, but increased 5% on a sequential basis.

The consumer discretionary space received a boost from solid earnings in the space and apparently ongoing short covering in Sears Holdings. The Consumer Discretionary SPDR ETF (NYSE: XLY) gained 0.45% to $42.314 after posting a new all-time high of $42.42.

Sears Holdings (NASDAQ: SHLD) surged to the top of the S&P 500, as shares rallied 6.17% to $47.30. The stock saw another big upside day on no apparent news, which suggest additional short covering. Sears has been able to rebound sharply from last year, surging close to 50% year to date.

Also in the sector, Yum! Brands (NYSE: YUM), the Pizza Hut, KFC, and Taco Bell restaurant chains owner and operator, jumped 2.63% to $64.85 after the company posted better than expected earnings on higher than estimated revenues thanks to a surge in sales in China. Rival McDonald’s (NYSE: MCD) climbed 1.43% to $100.91 on the news, posting the biggest percentage gain in the Dow Jones Industrial Average.

In tech land, Apple (NASDAQ: AAPL) outperformed, climbing 1.05% to $468.83. The stock posted a new all-time high of $469.75 amid ongoing chatter of the potential of an Apple TV set. Barclays joined the conversation by saying that it estimates that the Apple TV or iTV could add $5.40 per share in earning in fiscal 2013.

Also helping the sector to the upside and the Technology SPDR ETF (NYSE: XLK) to post a new 52-week high in the session were shares of Advance Micro Devices (NYSE: AMD). The chipmaker jumped more than 3% after it was upgraded to a Buy at Longbow Research.

Elsewhere in the blue chip index, Coca-Cola (NYSE: KO) gained 0.76% to $68.55 after the world’s largest soft drink maker reported better than expected quarterly earnings on revenues that were higher than consensus.

And Bank of America (NYSE: BAC) fell 1.5% to $7.85 after trading as high as $7.99, giving back its gains from the prior session. The stock has jumped 41.1% year to date, so participants were taking a breather on the name, particularly put options saw increased activity in the prior session, with investors growing concern over the amount of gains in the name since its low of $4.92, which was posted just seven weeks ago. BofA has the biggest percentage decline in the Dow, as a judge ruled that a lawsuit that claimed the company misled shareholders over the Merrill Lynch acquisition can continue as a class action suit.