Stocks Rallied on Report of Central Bank Action

Published on Thursday, 14 June 2012 18:36 Written by Christopher Lynn

New York, June 14^th (TradersHuddle.com) – Stocks rallied into the close of the session following a report that central banks around the world are preparing coordinated action to inject liquidity after the Greek election over the weekend.  The equities and commodities markets have been higher for most of the day, boosted by hopes that the Fed will unveil another round of quantitative easing.

The Dow Jones Industrial Average rallied 155.53 points, or 1.24%. The S&P 500 index jumped 14.22 points, or 1.08%, while the NASDAQ climbed 17.72 points, or 0.63%.

The market started to the upside despite poor overseas performance amid ongoing euro zone woes, with Spanish bond yields spiking to a record of 7% following a Moody’s downgrade. Futures fell shortly after disappointing weekly jobless claims data, but quickly reversed as the Dollar slid and gold strengthened amid speculation that the weak data might spur another dose of quantitative easing by the Fed.

Hopes of QE3 kept buoyancy on stocks and commodities for most of the day, in the final hour of trading a report that central banks will inject liquidity following the Greek elections helped boost gains into the close. Central banks are worried over bank runs in Greece and other euro zone periphery countries if the leftist party, which is seen as anti bailout, wins.

The move was broad based, with energy, healthcare, and consumer stocks posting the biggest gains, while technology and utilities lagged. The energy sector was boosted by a surge in natural gas prices following bullish inventory data and after crude oil prices had their best day in 2 months on rising hopes for additional monetary easing by the Fed and other global central banks. Cabot Oil & Gas (NYSE: COG) climbed almost 9% on volume that was nearly double the daily average, posting the second biggest gain in the S&P 500 index. Meanwhile, Southwestern Energy (NYSE: SWN) jumped more than 4%, as it took advantage of the natural gas rally.

Consumer stocks outperformed during the day. International Game Technology (NYSE: IGT) surged to the top of the broad market index, as shares soared more than 14% to $15.12 on news of a $1 billion share repurchase program. Home Depot (NYSE: HD) logged the second best gain in the Dow, as shares gained more than 2%, while Best Buy (NYSE: BBY) climbed 2.1% to $19.81 after it was upgraded to a Neutral from Sell at Citigroup. And Walt Disney (NYSE: DIS) jumped 2% to $47.18 after posting a new all-time high of $47.45.

Meanwhile, Kroger (NYSE: KR) jumped 6% during the day as the company topped earnings expectations by $0.05 per share, while it raised fiscal 2013 EPS guidance and announced a $1 billion share repurchase program. Costco Wholesale (NASDAQ: COST) gained 2.75% on news that it will buy out its Mexican partner and will take full control of the 32 stores in that country, which is Costco’s third largest market.

In the financial sector, Travelers (NYSE: TRV) climbed to the top of the blue chip index, as shares jumped 2.38% to $63.15. Banks were also higher, with Bank of America (NYSE: BAC) jumping 2.13% to $7.66 despite the weak weekly jobless claims data. Regions Financial (NYSE: RF) added 2.3% on the session after an upgrade from Goldman Sachs.

Technology lagged behind, as participants bypassed Apple (NASDAQ: AAPL) during the session. The stock underperformed, sliding 0.11% to $571.53. Apple continues to trade below its 50day moving average, which was briefly probed earlier in the week ahead of the company’s WWDC.

In the space, Nokia (NYSE: NOK) plunged more than 15% after announcing that it will be cutting 10,000 jobs. The company also warned that the second quarter loss could be larger than expected, as it continued to struggle amid the fierce competition from Apple’s iPhone and cheap Android devices.

Elsewhere, Facebook (NASDAQ: FB) rallied 3.7% to $28.29 after the company said that it’s planning to launch a new advertising model, with the intention to boost the growth of its digital ad sales. The company said that the Facebook Exchange, which will debut within weeks, would let advertisers reach specific types of users on the social network based on their browsing history. Prices will be based on the cost per thousand viewers and spots will be sold via third-party technology partners.