Worries about Greece and China abating, as large caps see big advance
U.S. stocks rose for a fourth day, European shares rebounded from a three-month low and the euro gained as Greece prepared for a confidence vote that may determine its financial future. Oil reversed early gains and Treasuries fell, while the dollar weakened versus most peers.
The Standard & Poor’s 500 Index added 1.1 percent to 1,292.29 in late afternoon trading in New York and the Stoxx Europe 600 Index climbed 1.4 percent, its biggest gain since April 20. The euro strengthened 0.6 percent to $1.4394. Costs to protect European sovereign debt slid as Greek and Spanish bonds rallied. Ten-year U.S. Treasury yields increased two basis points to 2.97 percent.
The euro also gained against the pound amid optimism that Greek Prime Minister George Papandreou will win a confidence vote tonight, helping the government enact budget cuts needed to qualify for international aid and avoid a default. Investors also awaited a statement from the U.S. Federal Reserve tomorrow to assess the outlook for interest rates and stimulus efforts.
“Greece is not another Lehman,” said Nick Sargen, chief investment officer at Fort Washington Investment Advisors in Cincinnati, which oversees more than $38 billion. “The market is saying that the worst is less likely for Greece. Assuming that the confidence vote goes through, then reaction is going to be that we dodged the bullet.”
Nine Groups Higher
Gains in the S&P 500 were led by commodity producers, industrial companies and technology firms, with nine of 10 groups higher. Best Buy Co. increased 3.1 percent as the world’s largest consumer electronics retailer set a $5 billion share repurchase plan and raised its quarterly dividend.
Eleven of 12 shares in an S&P gauge of U.S. homebuilders advanced. Purchases of existing homes fell 3.8 percent to a 4.81 million annual pace last month, in line with the 4.8 million median estimate in a Bloomberg News survey of economists, data from the National Association of Realtors showed. The median sales price declined from a year earlier and 31 percent of transactions were of distressed dwellings.
The S&P 500 has rebounded after a six-week slump brought it within half a point of erasing its 2011 gain on June 16 and made it the cheapest in almost a year compared with forecast earnings. The four-day advance has left the index up 2.9 percent for the year. The Nasdaq Composite Index gained 1.8 percent, reversing its decline for the year.
“The whole market is oversold and hence the bounce on a hint that one of the issues weighing on the market may be close to a resolution,” said Prasad Patkar, a money manager who helps oversee about $1.7 billion at Platypus Asset Management Ltd. in Sydney. “Greece is arguably the biggest of these issues because of its ability to cause severe damage to markets.”
The S&P GSCI index of 24 commodities was little changed, threatening to decline for a fifth day as oil erased gains in New York. Oil climbed as much as 1.6 percent earlier before erasing their gains as heating oil and gasoline dropped for a third day amid speculation that diesel fuel demand fell as supplies rose. Corn increased 2.1 percent on speculation rains may flood crops in China.
--Bloomberg News--
