U.S. Stocks Rebound From Selloff as Banks, Energy Shares Gain

30 Jun 2015 | Author: | No comments yet »

Drama in S&P Charts as the Index Closes In on the 200-Day Moving Average.

NEW YORK: US stocks opened higher on Tuesday, rebounding sharply from Monday’s losses, as investors hoped Greece would strike a last-minute deal to avoid an exit from the euro zone. “We are looking at some sort of a bounce from yesterday’s sharp decline,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. “This last-minute talk of a deal is basically causing some short covering.” In Asia, Chinese stocks reversed course to end up 5.5% after the government and regulators stepped up efforts to reverse a 20% slump in the past few weeks. Standard & Poor’s has downgraded Greece’s credit ratings further into junk territory, while speculating the probability the country will exit the eurozone is roughly 50 per cent. North American corporations have limited exposure to Greece, but investors are concerned about the fallout across Europe if the country exits the eurozone. The one-notch downgrade to CCC-minus comes with a negative outlook, and the credit ratings agency said it was likely Greece would default on its commercial debt within the next six months. The index is expected to rise to 97.3. (Star Editor: It has been reported that US consumer confidence strengthened in June, with the index rising to 101.4 in June compaed with the downwardly revised 94.6 in May.) Investors have been closely watching data for clues on the timing of an interest rate increase by the Federal Reserve.

S&P said it viewed the Greek government’s decision to hold a referendum next Sunday on whether to accept austerity measures demanded by its creditors as a sign Prime Minister Alexis Tsipras would prioritise the nation’s domestic politics over financial and economic stability, debt repayments and eurozone membership. EDT the Dow Jones industrial average was up 76.34 points, or 0.43 per cent, at 17,672.69, the S&P 500 was up 10.86 points, or 0.53 per cent, at 2,068.5 and the Nasdaq Composite was up 31.45 points, or 0.63 per cent, at 4,989.92.

S&P estimated the Europe’s support to Greek banks — directly through the European Central Bank’s main refinancing operations and indirectly via the Bank of Greece ’s Emergency Liquidity Assistance — exceeded 70 per cent of the country’s GDP. American investors were shaken from a two-month slumber by a global selloff that pushed the Chicago Board Options Exchange Volatility Index up 34 percent, the biggest increase since April 2013.

The index had climbed as much as 3 percent during the period, boosted by health-care companies amid merger activity, and as banks rallied with rising bond yields. The benchmark equity measure last week came within a point of its all-time high before slipping amid concerns that Greece wouldn’t reach a deal with its creditors before its bailout expires today. S&P said though failure to make the IMF payment wouldn’t constitute a commercial default under its criteria, it was a legal event of default under a December 2012 agreement with the European Financial Stability Facility. Stocks have only crossed the level once since 2012 — the period of last October’s selloff, which gave way to an 11 percent advance at the end of 2014.

From the same period a year prior, prices saw a 4.9% increase –lower than the 5.5% expected gain. “Home prices continue to rise across the country, but the pace is not accelerating,” David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said in the report. “Moreover, consumer expectations are consistent with the current pace of price increases. A recent national survey published by the New York Fed showed the average expected price increase among both owners and renters is 4.1%.” Traders also got a snapshot of the Midwest manufacturing sector. That level is 2,078.48, about 20 points above the index’s closing level Monday. “It’s not good on the S&P and the presumption is we’re going lower,” Worth said.

A report today showed home prices rose at a slower pace than projected in April, indicating the market was experiencing uneven gains as it entered the busier selling season. June Consumer Confidence. [Expected 97.5 vs. 95.4 in May.] Volatility has returned to the stock market, and it could become more prevalent over the next few days if worries increase over possible contagion from Greece’s debt drama.

For the most part, the markets appeared to shrug off concerns about Greece’s future in the eruo – worries that were the primary downward catalyst for Wall Street in the prior session. It was unclear in the fluid situation where exactly Greece stands in ongoing negotiations with its international creditors to negotiate a bailout package before a looming default.

If continued that equity markets could stand to rally if the Greek PM supports the European Commission’s so-called bailout terms before Tuesday’s deadline. The operator of the University of Phoenix said its quarterly profit dropped to $48.1 million, or 44 cents a share, from $66 million, or 59 cents a share, a year earlier. Europe, Athens Battle for Greek Hearts and Minds: European and Greek leaders began their battle for the Greek electorate, each trying to convince voters—who suddenly hold the future of Europe’s currency union in their hands—as to which path will bring the least pain. European Stocks Fall Further: European stocks extended losses on the day Greece’s international bailout program is set to expire, leaving the country teetering on the brink of default.

Willis Group, Towers Watson to Merge: Insurance broker and risk advisory firm Willis Group and professional services group Towers Watson have agreed to an all-stock merger that values the combined company at $18 billion. Puerto Rico Urges Concessions From Creditors: Investors in Puerto Rico’s bonds braced for losses as soon as this week, after the U.S. commonwealth said it can’t pay its debts. Webcast by Puerto Rico’s Governor Momentarily Shows Game Show Instead: A webcast meant to deliver a message from Puerto Rico Governor Alejandro Garcia Padilla on the island’s financial woes instead started on a lighter note, as the feed mistakenly began by showing the game show “¿Quién Sabe Más?” KKR Agrees to $30 Million SEC Settlement: KKR agreed to pay nearly $30 million to settle charges that it improperly shifted more than $17 million in so-called broken-deal expenses to its funds, breaching its fiduciary duty. Wall Street Is Watching for the Imminent Leap Second: Firms and exchanges around the world will be watching markets closely on Tuesday, June 30th at 8 p.m.

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