Markets recouped the day's early losses to end modestly higher
on Tuesday, following reports that Greece was close to concluding
an agreement with private creditors. Domestic data that suggested
improving job conditions also contributed towards the buoyant mood.
However, the gains were anything but robust, as investors refrained
from betting big until the deal finally comes through. Nonetheless,
the Dow closed at its highest level since May 2008, while seven of
the ten industry groups in the S&P 500 posted modest gains.
All of the benchmarks were trading in the negative zone during
the initial hours with the Dow Jones Industrial Average (DJI)
hitting an intra-day low of 12,782.57. The Dow recouped its losses
to finally end 0.3% higher at 12,878.20. The Standard & Poor
500 (S&P 500) gained 0.2% to sign off yesterday's trading
session at 1,347.05. The tech-laden Nasdaq Composite Index edged up
0.07% to close at 2,904.08. Consolidated volumes on the New York
Stock Exchange, the American Stock Exchange and Nasdaq remained
weak at about 6.48 billion shares, lower than last year's daily
average of 7.84 billion. For 55% of the advancers on the NYSE, 41%
of the stocks moved lower. The remaining stocks were left
unchanged.
Reports from across the Atlantic which suggested that Greece was
close to inking a deal with private creditors lifted the overall
sentiment. Greece's government is preparing a list of economic
measures that will qualify them for the next bailout package.
French and German leaders have demanded that the nation adopt new
austerity measures if they expect to receive the next installment
of the bailout package. Greece is in dire need of the $171 billion
in order to avoid a debt default. Earlier, during a joint briefing
with French President Nicolas Sarkozy, Merkel had commented: "Time
is running out".
Meanwhile, speaking before Congress, Federal Reserve Chairman
Ben Bernanke said: "Banks have made progress in protecting
themselves against problems in European sovereign or bank debt. But
I would agree that if there is a very substantial crisis or similar
problem in Europe that, because there are so many channels in which
that would flow to the financial system, our banks, our whole
financial system would still be significantly affected".
Additionally, he told the Senate Budget Committee that there is
"a long way to go before the labor market can be said to be
operating normally." Recent data has mostly been positive,
suggesting an improving jobs market. The unemployment rate fell to
8.3% in January and the latest government report also reflects the
strongest jobs growth in nine months. Initial claims have showed a
downtrend and are well below the significant 400, 000 mark. Even
yesterday, a report from Labor Department suggested that job
openings in December climbed to the highest level in almost a year.
Job openings soared to 3.38 million, rising by 258, 000 in
December, the biggest jump since February 2011.
However, as mentioned earlier, Bernanke maintained a cautious
outlook on the job scenario. He said: "We are concerned that over
the past few years that there has been some modest increase in the
sustainable rate of unemployment. One of the factors contributing
to that is the fact that about 40 percent of the unemployed have
been unemployed for six months or more and those folks lose skills,
they lose attachment to the labor force. It makes it difficult for
them to find steady employment in the longer-term".
Utilities and consumer discretionary stocks posted decent
performance among the S&P 500's sectors. The Utilities SPDR
Select Sector Fund (
XLU
) fund was up 0.7% and the Consumer-Discretionary SPDR Select
Sector Fund (
XLY
) gained 0.5%. Among utilities' stocks, The Southern Company (NYSE:
SO
), Duke Energy Corporation (NYSE:
DUK
), American Electric Power Company (NYSE:
AEP
), NextEra Energy, Inc. (NYSE:
NEE
) gained 0.7%, 1.0%, 0.7% and 0.4%, respectively. As for the
Consumer-Discretionary stocks, McDonald's Corporation (NYSE:
MCD
), Amazon.com, Inc. (NASDAQ:
AMZN
), Nike, Inc. (NYSE:
NKE
) and Starbucks Corporation (NASDAQ:
SBUX
) gained 1.4%, 0.6%, 0.7% and 0.3%, respectively.
AMER ELEC PWR (
AEP
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AMAZON.COM INC (
AMZN
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DUKE ENERGY CP (
DUK
): Free Stock Analysis Report
MCDONALDS CORP (MCD): Free Stock Analysis
Report
NEXTERA ENERGY (NEE): Free Stock Analysis
Report
NIKE INC-B (NKE): Free Stock Analysis Report
STARBUCKS CORP (SBUX): Free Stock Analysis
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SOUTHN COMPANY (SO): Free Stock Analysis Report
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