Stocks Posted Best June in more than a Decade

Published on Friday, 29 June 2012 18:21 Written by Christopher Lynn

New York, June 28^th (TradersHuddle.com) – Stocks surged along with other risky assets after participants cheered the agreement reached by EU leaders in which the region’s rescue fund would be able to recapitalize banks. The Dow posted its best June since 1997, the S&P 500 its strongest performance since 1999, and the NASDAQ since 2000.

The Dow Jones Industrial Average rallied 277.83 points, or 2.2%. The S&P 500 index jumped 33.12 points or 2.49%, while the NASDAQ surged 85.86 points, or 3%.

For the week, the Dow gained 1.9%, while the S&P 500 jumped 2% and the NASDAQ climbed 1.5%. For June, The Dow rallied 3.93%, the NASDAQ jumped 3.81%, and the S&P 500 gained 3.96%, while for the quarter, the blue chip index lost 2.51%, the S&P 500 fell 3.29% and NASDAQ tumbled 5%.

The market surged at the open following the positive news out of the EU summit, in which EU leaders agreed to provide relief to Italian and Spanish borrowing costs without additional austerity measures and as the region’s rescue funds would be able to recapitalize banks directly, without increasing sovereign debt. The surprise out of the summit pushed risk assets higher, with a broad move around the world.

Stocks continued with strong gains through out the session despite tepid economic news in the U.S. Consumer sentiment dipped to its lowest level this year, and consumer spending was flat in May for the first time in 5 months, while income rose slightly. The pace of business activity in the Midwest, captured by Chicago PMI, edged up in June.

The move was broad based, with the major benchmark indices on track to log monthly gains on the last trading day of the quarter and ahead of next week that is expected to have light trading volume due to the 4^th of July Holiday.

All of the S&P 500 sectors logged gains, with industrials, energy, and materials jumping more than 3%, while technology, financials, and consumer discretionary gained more than 2%.

In the industrial sector, Joy Global (NYSE: JOY) surged more than 5%, making it one of the top performers of the day, while rival Caterpillar (NYSE: CAT) was downgraded to Market Perform from Outperform at Raymond James, but still logged a nice gain of 2.76% to $84.91.

The energy space received a boost from an epic rally in crude oil. The commodity surged 9.4%, to $84.96 per barrel as participants returned to riskier assets and as traders moved to start new positions knowing that the European Union’s embargo on Iranian oil imports starts on Sunday. Denbury Resources (NYSE: DNR) rallied 6.8% to $15.11, topping the energy sector, while Exxon Mobil (NYSE: XOM) jumped 3%.

Financials benefited from the reduced risk profile coming from Europe. Bank of America (NYSE: BAC) rallied more than 5.7% to post one the biggest gain in the Dow Jones Industrial Average and breaking above its 50day moving average, while Morgan Stanley (NYSE: MS), one of the financial firms with more exposure to Europe, jumped 5.2%.

Technology helped move the broad market and the big gain in the tech heavy NASDAQ. EMC Corp. (NYSE: EMC) rallied more than 8%, posting the biggest gain in the sector. Yesterday, Wells Fargo resumed coverage on the stock with Outperform.

Big tech also participated in the rally. Cisco (NASDAQ: CSCO) rallied 4% to $17.17, logging the second biggest gain in the blue chip index, while Apple (NASDAQ: AAPL) gained 2.6% to $584, closing above its 50day moving average at the $572 area. A research report from Bernstein said that despite plenty of opportunity for the iPhone in China, the company faces short-term hurdles, as the firm expects a decline of 1.5 million iPhones amid a slowdown in the Chinese economy.

Meanwhile, Facebook (NASDAQ: FB) failed to participate in the rally, as the stock lost 0.85% to $31.09 after Macquarie initiated coverage on the stock with a neutral. This week the stock pullback from $33 per share after it received mixed ratings and concern over slower revenue growth weighed on the stock.

In the consumer space, Nike (NYSE: NKE) plunged to the bottom of the S&P 500, as shares tumbled 9.4% to $87.78. The company missed earnings expectations, as margins took a hit from costs and a restructuring charge.

Ford (NYSE: F) slumped nearly 5% after the company said that it expects increased losses from its overseas business, with its international losses likely tripling in the second quarter amid a slowdown in European sales.

On the flip side, Constellation Brands (NYSE: STZ) soared 24%, posting the biggest gain in the sector after the company beat earnings expectations and bought the remaining 50% of Crown Imports. Constellation will buy the stake from Anheuser-Busch InBev after it completes its purchase of the remaining 50% stake of Grupo Modelo. Anheuser-Busch InBev (NYSE: BUD) rallied 7.9% to $79.65 after the company will own the Corona beer brewer after it completes the deal valued around 20 billion.