US Stocks Rebound After Steep Selloff

30 Jun 2015 | Author: | No comments yet »

At midday: TSX bounces higher as banks, energy shares gain.

Canada’s main stock index regained some ground on Tuesday after Monday’s precipitous drop, with banks rebounding and rising oil prices helping energy stocks. Greek Finance Minister Yanis Varoufakis said the debt-wracked country would not make a debt repayment of about €1.5 billion ($A2.20 billion) to the International Monetary Fund due later on Tuesday.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.U.S. stocks held higher in choppy trade Tuesday, attempting recovery from the worst trading day of the year, as investors turned more optimistic on the Greece crisis. ( Tweet This ) “The Greece situation continues to grind on.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.

Still, fears about a default “are being soothed somewhat by reports that a last-second deal may still be achieved,” said an investor note from Charles Schwab. 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. It fell more than 2 per cent on Monday. “Eventually cooler heads prevail and good quality companies look cheaper after a pullback yesterday and investors come back to the markets,” said Kevin Headland, director of capital markets and strategy at Manulife Asset Management. 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. Heavily weighted gainers on the index included Suncor Energy Inc, which rose 1.6 per cent to $34.32, and Valeant Pharmaceuticals International Inc, which advanced 0.7 per cent to $274.86. 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. We also had a lot of nervousness (yesterday),” said Adam Sarhan, CEO of Sarhan Capital. “But from a market standpoint you really want to see the bulls step up and buy this dip.

Tuesday’s bounce appeared to be fueled by news that Greece and its lenders may find a last-minute measure to avert a default, after Greece proposed a two-year deal using the eurozone bailout fund, according to The Wall Street Journal. Market reaction to domestic economic reports was muted. “This is a holiday-shortened week and with Greece news driving the markets, we expect some erratic trading. 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.

The Eurogroup of euro zone finance ministers will hold a conference call on Greece at 17:00 GMT (1:00 pm ET) on Tuesday, euro zone sources said in a Reuters report. 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.

Headland said North American trading will likely be subdued through the rest of the week ahead of a Greek referendum on the terms of a bailout package on Sunday. 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. Questions remain about the future of the country as it heads toward a referendum Sunday that is being framed as a vote on whether Greece should stay in the eurozone. U.S. house prices rose in April, supported by the spring sales market, with gains in all the cities tracked by the Case-Shiller 20-city composite index released Tuesday, however the gain fell short of expectations. 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 Tuesday. The German 10-year bund yield was slightly lower at 0.77 percent. “The market wants to see a number that is above the boom-bust line,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. “A number like that is either an anomaly or completely anomalous top the other readings of other (data).” The consumer confidence index topped expectations with a 101.4 read for June. CAG, +1.57% shares rose 0.9% after the company reported fiscal fourth-quarter earnings and said it’s planning to exit the private-label business as it focuses more on growing its consumer and commercial foods segments.

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. Stocks have only crossed the level once since 2012 — the period of last October’s selloff, which gave way to an 11-per-cent advance at the end of 2014. A report Tuesday 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.

Other markets: Chinese shares bounced back from heavy selling seen Monday, pulling the benchmark back from losses that had put it in bear-market territory. 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. ConAgra—The company behind brands such as Healthy Choice, Hebrew National, and Hunt’s matched Street estimates with adjusted quarterly profit of 59 cents per share, though revenue was below forecasts.

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