US stocks rally despite weak economic data

NEW YORK: US stocks on Tuesday shook off weak US economic reports, amid rising hopes that Greece will reach a deal to keep a debt default at bay.

The Dow Jones Industrial Average leaped 128.21 points (1.03 percent) to close at 12,569.79. Still, the blue-chip Dow was down 1.9 percent over the month.

The S&P 500-stock index, a broader measure of the markets, advanced 14.10 points (1.06 percent) to 1,345.20, while the tech-heavy Nasdaq Composite climbed a hefty 38.44 points (1.37 percent) to 2,835.30.

Stocks headed higher at the start of the holiday-shortened week amid rising hopes for a solution to Greece's debt crisis and signs of recovery in post-quake Japan that had lifted overseas markets.

US financial markets had been closed Monday for Memorial Day.

"Eurozone debt concerns are easing amid optimism that Greece may be able to avoid debt restructuring," Charles Schwab analysts said in a client note.

"The optimism out of Europe is helping overshadow some disappointing US economic data, while pressuring the US dollar to support a solid gain in WTI crude oil prices."

The Conference Board said its consumer confidence index slid to 60.8 in May from 66.0 in April on growing worries about unemployment and rising food and fuel prices.

Manufacturing activity in the Chicago area slowed for the third straight month in May, the Institute for Supply Management said, while the S&P/Case-Shiller index showed home prices fell for the ninth straight month in March.

On the merger and acquisition front, chemicals firm Ashland said it was buying privately owned International Specialty Products for about $3.2 billion in cash. Ashland leaped 11.9 percent to $68.34.

Shares in Wal-Mart rose 0.9 percent to $55.22. South Africa's anti-trust tribunal gave the world's largest retailer the green light for its first foothold in Africa, approving its bid to buy a controlling stake in Massmart, which operates in 14 African countries.

Apple bounced 3.1 percent higher, to $347.83, after the firm said chief executive Steve Jobs will return from sick leave Monday to unveil a new operating system.

General Dynamics added 4.1 percent at $74.22 after saying it received a $744 million contract from the US Navy to build two ships.

The bond market strengthened. The yield on the 10-year Treasury bond fell to 3.05 percent from 3.06 percent late Friday, while that on the 30-year bond dropped to 4.22 percent from 4.24 percent. Bond prices and yields move in opposite directions.

Copyright AFP (Agence France-Presse), 2011