Thursday, 14 June 2012 21:36
NEW YORK: US stocks rose on Thursday in a broad rally on hopes that results from Greek elections over the weekend would ease short-term worries about the country leaving the euro zone.
But trading was volatile as weak data in the US labor market and rising bond yields in Italy and Spain continued to weigh on investor sentiment.
Quick market swings were expected to persist ahead of the Sunday elections. The prospect that the election results could lead to Greece's exit from the euro zone had pressured US equities for the past several weeks and contributed to a steep decline on Wednesday.
"Greek stocks are in rally mode on hopes for a decisive victory for the conservative New Democracy party. We caught a glimpse of a headline earlier suggesting that 80 percent of Greeks want to remain inside the euro area, which is what we have thought would remain an influential factor throughout the elections," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York.
Greek banking stocks surged on Thursday, rising over 20 percent amid market talk that secret opinion polls showing that a government favorable to the international bailout agreement was likely to emerge after the June 17 election.
The Dow Jones industrial average was up 112.84 points, or 0.90 percent, at 12,609.22. The Standard & Poor's 500 Index was up 9.80 points, or 0.75 percent, at 1,324.68. The Nasdaq Composite Index was up 16.48 points, or 0.58 percent, at 2,835.09.
The CBOE Volatility index, Wall Street's so-called fear gauge, was down 1.5 percent to near 24, after soaring in the previous session.
The number of Americans filing new claims for unemployment benefits unexpectedly rose last week, the latest economic data pointing to sluggish conditions in the United States.
In other US data, consumer prices fell 0.3 percent in May, the biggest drop in over three years.
Further weighing on market sentiment, Moody's Investor Service cut its rating on Spanish government debt on Wednesday by three notches to Baa3, saying the recently approved euro zone plan to help Spain's banks will add to the country's debt burden.
The S&P is flat for the week as sharp drops have been partially offset by some equally strong rallies. So far in the second quarter, however, the index is down 5.9 percent.
"The decline may have gone far enough that prices may at least avoid slipping further, but there is still a lot of uncertainty out there," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.
Nokia Corp plans to cut 10,000 more jobs and said its phone unit would post a deeper-than-expected loss in its second quarter because of tough competition. US-listed shares plunged 17.2 percent to $2.31.
Copyright Reuters, 2012