Stocks Jumped Ahead of EU Summit
Published on Wednesday, 27 June 2012 17:33 Written by Christopher Lynn
New York, June 27th (TradersHuddle.com) – Stocks gained on a thinly traded session as participants bid the market higher ahead of the EU summit. Economic data was also supportive of the move, as durable goods orders data was mixed and as pending home sales figures hit a 2-year high.
The Dow Jones Industrial Average gained 92.34 points, or 0.74%. The S&P 500 index jumped 11.86 points, or 0.90%, while the NASDAQ climbed 21.26 points, or 0.74%.
The market started with modest gains amid some strength in overseas markets and mixed durable goods data. Commentary from EU leaders picked up ahead of the EU summit scheduled for tomorrow, as the Bank of Spain said that its slowdown intensified in the second quarter, while Italy auctioned 6-month securities, resulting in the highest yields since December.
Durable goods data surprised to the upside in May, with a 1.1% gain, after falling 0.2% in April. However, excluding transportation orders, data showed an increased of 0.4%, below the 0.7% figure that was widely expected.
The move to the upside came amid low trading volume, but still was broad with most of the S&P 500 sectors ending in positive ground. Energy, financials, and utilities logged the best gains, while consumer discretionary was the only sector closing in negative territory.
The energy sector jumped more than 2%, as crude oil gained more than 1% to settle above $80 per barrel and as natural gas jumped more than 5% as a record-breaking heat wave, which is already impacting the nation will likely lead to increased demand. Both natural gas plays, Cabot Oil & Gas (NYSE COG) and QEP Resources (NYSE: QEP) surged to the top of the energy sector and the S&P 500 Index. Cabot surged 9%, while QEP Resources rallied 8%.
Coal stocks were also in demand, with Alpha Natural Resources (NYSE: ANR) and Peabody Energy (NYSE: BTU) jumping more than 5%. Alpha Natural announced that it has amended its $1.6 billion secured credit facility enhancing its financial flexibility, while Peabody lowered its 2012 CapEx guidance by $200 million.
Financials were also in demand, with JPMorgan (NYSE: JPM) and Bank of America (NYSE: BAC) leading the gains in the Dow Jones Industrial Average. JPMorgan rallied 3%, while Bank of America jumped 2% to $7.77, closing above its 50day moving average at $7.69. Yesterday, Goldman Sachs added JPMorgan to its coveted Conviction Buy List.
Technology underperformed in the session. Apple (NASDAQ: AAPL) climbed 0.40% to $574.50 on news that a U.S. Judge backed the iPhone and iPad maker request to stop Samsung from selling its Galaxy Tab 10.1 Tablet in the U.S. due to patent infringements. However, Google (NASDAQ: GOOG) unveiled its own version of the tablet, Nexus 7 that will run its latest version of its Android OS. The new tablet will have an entry price of $199 and will start shipping in mid-July. Google added 0.70%.
In the space, Facebook (NASDAQ: FB) slid 2.6% to $32.23 as its IPO quiet period expired. Numerous firms issued new ratings, which were mixed. JPMorgan, Morgan Stanley, Piper Jaffray, and Wells Fargo initiated coverage with Overweight, while Goldman Sachs issued a Buy rating and Bank of America Merrill a Neutral. Barlcays, Citigroup, Lazard, and Credit Suisse placed the stock in a Hold, while BMO Capital issued an underperform rating.
Facebook had hit the $33 per share level in the prior session, for the second time in five days, but the level has proved tricky for the stock to maintain.
On the earnings front, Lennar (NYSE: LEN), the homebuilder, rallied 7.8% to $28.70 after the company beat on both top and bottom lines, as it logged the fifth consecutive quarter of gains in new orders.
Monsanto (NYSE: MON) jumped 3.9% to $80.89 after it also had a strong earnings report. The company beat quarterly EPS by $0.05 on revenues that jumped 16.9% from a year ago period to $4.22 billion. Meanwhile, General Mills (NYSE: GIS) slumped 1.6% to $37.55 after the cereal maker topped earnings estimates, but its full year earnings estimates was weaker than expected.
Elsewhere, Best Buy (NYSE: BBY) jumped more than 2% to $19.80 on a report that founder Richard Schulze was working with several banks, including Credit Suisse to explore the possibility of a private buyout deal.
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