Stocks Gained; Dow Snapped 4-Day Losing Streak

Published on Tuesday, 05 June 2012 19:13 Written by Christopher Lynn

New York, June 5^th (TradersHuddle.com) – Stocks gained, with the Dow snapping a 4-sesison losing streak after services sector activity picked up in May and worries over the euro zone debt crisis eased somewhat amid speculation over possible coordinated action around the world.

The Dow Jones Industrial Average climbed 26.49 points or 0.22%. The S&P 500 index gained 7.32 points, or 0.57%, while the NASDAQ jumped 18.10 points, or 0.66%.

The market started with modest losses after futures paired overnight gains which came after Chinese services PMI climbed to a 19-month high and euro zone PMI data was mixed. A report of a coordinated call of G7 ministers to discuss the European debt crisis provided a boost on sentiment early on, but the positive tone faded into the open.

Stocks received a small boost after the ISM Services reading was slightly better than expected, as activity in the sector picked up in May. The G7 finance ministers conference call ended without major agreements over how to handle the debt crisis in Europe, however the group will continue to closely monitor the developments in the euro zone ahead of the G20 meeting late this month in Los Cabos, Mexico.

The upside move was broad based with most of the S&P 500 sectors ending in positive territory. The embattled financials, materials, and energy sectors logged the biggest gains in the session, while consumer staples fell.

American International Group (NYSE: AIG) was one of the top gainers on the day, as shares jumped more than 4% to $28.65. Meanwhile, IntercontinentalExchange (NYSE: ICE) rallied more than 5%, logging the biggest gain in the sector. The company reported yesterday an 8% increase in May’s average daily futures volume.

Morgan Stanley (NYSE: MS) jumped 4% to $12.86 on broad strength in the sector. In after hours, CNBC was reporting that Facebook’s lead underwriter was now lending shares to place short positions in the social network play. In the Dow Jones Industrial Average, Banks also saw a sharp bid and staging a good size rebound. JPMorgan rallied 3.2%, while Bank of America jumped 2.9% to $7.10, closing below its 200day moving average, which the stock broke below last Friday.

Materials benefited from strength in CF Industries (NYSE: CF) and Eastman Chemical (NYSE: EMN). CF rallied more than 4%, while Eastman climbed 3.5% in the session. Goldminer, Newmont (NYSE: NEM) slumped 0.4% despite gold booking a small gain for the day.

The energy sector gained despite crude oil trading near an 8-month low. Chesapeake Energy (NYSE: CHK) was once again among the top gainers for the session, as shares climbed nearly 3% to $17 on news the company will sell 338,000 in the oil-rich Utica Shale in Ohio. The sale is part of Chesapeake’s efforts to pare $9.5 billion in debt by the end of this year. Yesterday, the stock rallied on news that company agreed to replace four of its current board members. Southeastern Asset Management, Chesapeake's largest shareholder, will nominate three of the new directors, while billionaire investor Carl Icahn and his affiliates will pick the fourth.

In the consumer space, homebuilders received a new life after Lennar (NYSE: LEN) surged to the top of the S&P 500, with shares rallying 6.7% to $25.27, following positive reaction to its solid earnings report and upbeat guidance for the coming quarter. After falling into correction territory since Mid-May, Lennar is now poised for a short squeeze. Rival PulteGroup (NYSE: PHM) jumped nearly 6% on the news.

Wynn Resorts (NASDAQ: WYNN) also provided strength to the sector. Shares of Wynn jumped 2.9% after CEO Steve Wynn said that its newest resort in Macau would cost $4 billion to build. The company already broke ground on the new resort in Cotai, a strip of land reclaimed from the sea, saying that it still expects a healthy return on its investment.

On the flip side, Starbucks (NASDAQ: SBUX) tumbled 2.76% to $52.41, dragging on the sector on news that the company will acquire La Boulange, a small bakery chain based in San Francisco for $100 million cash.

In technology, Hewlett Packard (NYSE: HPQ) gained 2.9% to $21.68, posting one of the biggest gains in the blue chip index on news that the company is seeking $4 billion from Oracle (NASDAQ: ORCL) over database software disputes. Shares of Oracle climbed 1.9% to $26.705. HP also confirmed it expanded Converged Cloud portfolio.

Apple (NASDAQ: AAPL) slumped 0.26% amid a report from Cannacord Genuity suggested that iPhone 4S demand was softening, as consumers delay purchases on anticipation of the launch of the new iPhone 5. The firm said that its May channel checks indicate that iPhone sales are tracking inline with its June quarter estimates of 27 million units, a 23% sequential drop over the last quarter. Separately, there were reports that Apple was planning to break away from using Google Maps on its iPhones in favor of using its own software.

Elsewhere, Facebook (NASDAQ: FB) continued to provide investors with pain after the botched IPO. The stock failed to find a bottom at the $26 handle, breaking below it. Facebook tumbled another 3% to $25.87 after logging a new record low of $25.75. Meanwhile, S&P Capital IQ raised its rating on the stock from a Sell to a Hold.