US rallies on hopes of Greek debt plan
WALL St bulls took the upper hand with a one per cent rally yesterday as hopes for a new plan to deal with Greece’s debt crisis relieved some investor worry, but grim economic data suggested more hurdles ahead as the S&P 500 closed out its worth month since August.
Stocks rebounded late in the session, nearing levels that were approached at the open, but later fell following lacklustre data on US Midwestern factory demand and consumer confidence.
European officials were mulling options for a second bailout package for Greece, with private-sector participation still under discussion. Germany, which was resisting extra funding, may drop its push for an early rescheduling of Greek bonds, the Wall Street Journal reported.
Rising expectations for a package pushed the dollar down against the euro, helping lift commodity prices and materials stocks. Crude futures rose 2 per cent while Chevron gained 1.6 per cent to $104.91 and Alcoa added 2 per cent to $16.81. The S&P energy index added 1.04 per cent.
The Dow Jones industrial average shot up 128.21 points, or 1.03 per cent, to 12,569.79. The Standard & Poor’s 500 Index gained 14.10 points, or 1.06 per cent, to 1,345.20. The Nasdaq Composite Index rose 38.44 points, or 1.37 per cent, to 2,835.30.
For May, the Dow lost 1.9 per cent and the Nasdaq fell 1.3 pe rcent. The S&P fell 1.4 per cent, its worst month since August, when the US Federal Reserve announced the second round of its quantitative easing programme.
US single-family home prices dropped in March, below their 2009 low, according to the S&P/Case-Shiller composite index of 20 metropolitan areas. A separate report showed an unexpected drop in May consumer confidence, while the Institute for Supply Management-Chicago said business activity in the US Midwest grew much less than expected in May.
Tech shares also lifted the market, with the S&P information technology index up 1.6 per cent. Cisco Systems was one of the Dow’s top gainers, up 2.1 per cent at $16.80, while Apple climbed 3.1 per cent to $347.83 on the news that Steve Jobs, its chief executive who has spent months on medical leave, would open an annual developer’s conference.
US-listed shares of Nokia slumped 14.4 per cent to $7.02 after it abandoned hope of meeting key targets just weeks after setting them. The stock dropped on its heaviest volume since February.