Stocks Mixed as Spain's Woes Weighed

Published on Monday, 18 June 2012 19:25 Written by Christopher Lynn

New York, June 18^th (TradersHuddle.com) – Stocks closed mixed after worries over Spain’s banking system overshadowed the Greek election results that showed pro-bailout parties able to secure a majority of the seats in Parliament to form a government. Spanish bond yields rose to fresh record highs, amid reports that detailed a deteriorating health in the country’s banks. Technology jumped, while energy lagged in the session.

The Dow Jones Industrial Average lost 25.35 points, or 0.20%. The S&P 500 index added 1.94 points, or 0.14%, while the NASDAQ jumped 22.53 points, or 0.78%.

The market started with modest losses as European gains following the Greek election results waned amid pressure from record high Spanish bond yields. Overseas markets and U.S. futures initially reacted positively to the win of pro-bailout parties in the Sunday vote, which eased concerns over the country leaving the euro zone. However, data that showed a deteriorating health in Spain’s banking system, pushed yields in Spanish debt above 7% to fresh euro-era highs.

Stocks traded in a tight range for most of the session as worries over Spain overshadowed the positive results from the election in Greece, however good performance from technology helped the tech heavy NASDAQ to outperform and also pushed the broad market index into positive territory.

Most of the S&P 500 sectors closed in positive territory, with technology, consumer discretionary, and healthcare posting the biggest gains, while energy and financials lagged. eBay (NASDAQ: EBAY) was the top performer in the tech sector, with shares rallying 4.5% to $42.49 after Keefe Bruyette initiated coverage of the stock with Outperform. eBay logged the second biggest percentage gain in the S&P 500.

Apple (NASDAQ: AAPL) was also a positive influence in the sector, as shares wake up from doldrums of the recent session and jumped 2% to $585.78. The stock broke above its 50day moving average at $578.95, but still closed below its calculated resistance at $588.50. Topeka Capital said that Apple is on pace in calendar 2012 to generate the highest annual net income of any publicly traded company ever. The firm has a very bullish outlook for Apple with a target price of $1,111 over the next year, practically doubling from current levels.

Also in the Internet space, Groupon (NASDAQ: GRPN) surged 10.8% to $11.15 after Morgan Stanley upgraded the stock to Overweight from Equal Weight, while Facebook (NASDAQ: FB) rallied 4.6% to $31.41. Shares of the social media play have been moving higher ever since it appeared that it bottomed out at $25.52 on June 6^th. The company announced that its Chief Technology Bret Taylor is leaving the company to work on a new start-up and announce it will buy Face.com, a site that provides facial-recognition technology.

The consumer discretionary sector was lifted by good performance from the homebuilder group following data that showed homebuilder sentiment at its highest level in five years. Lennar (NYSE: LEN) rallied 4.1%, while D.R. Horton (NYSE: DHI) jumped 3.9% on the news.

Meanwhile, Starbucks (NASDAQ: SBUX) also provided a boost to the sector after BMO Capital reiterated its Outperform rating for the stock. Starbucks jumped 3% despite the firm also lowering its target price to $65.

In the healthcare sector, Tenet Healthcare (NYSE: THC) rallied 4.8% to $4.83, posting the biggest gain in the broad market index, as a decision from the Supreme Court over the Affordable Care Act was not delivered this Monday. The strike down of the individual mandate that requires the purchase of insurance could hurt the shares of hospital stocks like Tenet.

Weighing on the markets was the poor performance of the energy and financial sectors. In the energy sector a rally in natural gas prices failed to inspire buyers, as crude oil prices dipped below the $84 per barrel level. Alpha Natural Resources (NYSE: ANR) was the worst performer in the sector, after Cliffs Natural Resources (NYSE: CLF) cut its production output for thermal coal, citing weak demand.

Range Resources (NYSE: RRC) rallied more than 3% on the 6% jump in natural gas prices, while Chesapeake Energy (NYSE: CHK), the second largest producer in the U.S. for natural gas slumped 2.4%.

And financials wavered amid the turmoil in the euro zone periphery. Citigroup (NYSE: C) and Morgan Stanley (NYSE: MS), the banks with higher correlation to Europe slumped. Citi lost 2.7%, while Morgan Stanley tumbled 3.4%. Meanwhile, Bank of America (NYSE: BAC) fell 1.77% to $7.76 amid news that it’s close to a deal to sell its overseas wealth management business to Julius Baer for $1.5 to $2 billion.