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EU Optimism Fuels Dow's 277-Point Gain; Blue Chips Bulk Up in June
By: Schaeffer's Investment Research
Thanks to a successful European Union (EU) summit, the
Dow Jones Industrial Average (DJI)
enjoyed a massive burst of energy, as the bulls rushed back to the
Street. "It was all about Europe once again, but the news was
actually good this time. U.S. markets started the day off strong,
and the buying continued all the way into the close," smiled
Schaeffer's Senior Equities Analyst Joe Bell. "Euro-zone leaders
came to agreement on several key issues that investors hope will
improve financial conditions in the region and bring bond yields
lower for Italy and Spain."
Keep reading to see what else was on our radar today:
- Does today's explosive rally have the legs to push stocks even higher ?
- Sure it's the end of the week, but be sure to get your monthly and quarterly totals , as well.
- Plus, 3 technical indicators that give you something to be bullish about !
The Dow Jones Industrial Average (DJI - 12,880.09) gapped higher this morning, and extended its climb all the way until the closing bell. The Dow rocketed 277.8 points, or 2.2%, to end 0.3 point below its session peak. Twenty-nine of the 30 blue chips saw wins today, as Bank of America ( BAC ) led the long line of outperformers with a 5.7% rise. JPMorgan Chase & Co. ( JPM ) was the only losing issue, turning in a 0.4% drop. The Dow added 1.9% for the week, and 3.9% for during June -- its best monthly increase of 2012. For the second quarter, the blue-chip barometer was off 2.5%.
The S&P 500 Index (SPX - 1,362.16) rose 33.1 points, or 2.5%, landing just 0.01 point away from its session high. Meanwhile, the Nasdaq Composite (COMP - 2,935.05) surged 85.6 points, or 3%, marking its best session of 2012. For the week, the SPX gained 2%, and nearly 4% for the month. Its quarterly total arrived at a loss of 3.3%. The COMP tacked on 1.5% for the week, and jumped 3.8% for June, but its second-quarter deficit of 5.1% was the worst of its fellow benchmarks.
The CBOE Market Volatility Index (VIX - 17.08) tumbled 13.3% today, settling with its lowest daily close since May 2. The market's fear gauge peeled back 5.7% on the week, and saw a monthly loss of 29%. For the second quarter, the VIX was up 10.2%.
Bell continued, "With today's big jump, the SPX can now contend with the key 1,360 area , which has served as resistance earlier this month."
Turning to today's major market stories...
- Schaeffer's Columnist Adam Warner shed some light on the "prediction markets'" reaction to the Supreme Court's healthcare ruling.
- Dendreon Corporation ( DNDN ) saw call buying soar .
- Verizon Communications Inc. ( VZ ) jumped to a 12-year peak, while Gevo, Inc. ( GEVO ) pulled back to an all-time worst.
- Pessimistic traders continued to bear down on Patriot Coal Corporation (NYSE:PCX) and A123 Systems, Inc. (AONE)
- Analysts weighed in on Tenet Healthcare Corporation (THC) , Caesars Entertainment Corporation (CZR) , and Facebook, Inc. (FB) .
- Weekly options activity got a heavy work out on Lululemon Athletica inc. (LULU) and Cree, Inc. (CREE) .
- Options bulls are betting that Micron Technology, Inc.'s (MU) acquisition rumors will come to fruition in the next several months.
- Put players have a new appetite for Chipotle Mexican Grill, Inc. (CMG) .
- Schaeffer's Senior Technical Strategist Ryan Detrick revealed three technical indicators that could have bullish implications for the broader equities market.
For today's activity in commodities, options, and more, head to page 2.
Oil futures notched their best single-session percentage gain since March 2009 today, as positive news from the EU summit bolstered hopes for demand. Furthermore, the encouraging developments from across the pond weighed on the greenback, drawing foreign-currency holders to the dollar-denominated commodity. By the close, August-dated crude jumped $7.27, or 9.4%, to end at a three-week high of $84.96 per barrel. For the week, black gold advanced 6.5%. For the month and quarter, though, oil gave up 1.8% and 17.5%, respectively - crude's heftiest quarterly percentage drop since the end of 2008.
In similar fashion, gold futures also enjoyed a currency-related lift, capitalizing on the ailing dollar. Plus, the EU plan bolstered the malleable metal's appeal as an inflationary hedge. Against this backdrop, gold for August delivery advanced $53.80, or 3.5%, to end at $1,604.20 an ounce. For the week and month, the commodity tacked on 2% and 2.8%, respectively. For the quarter, however, gold shed 4%.
Levels to watch in trading...
Dow Jones Industrial Average (DJI - 12,880.09)
- support at 11,500; resistance at 14,000
S&P 500 Index (SPX - 1,362.16)
- support at 1,100; resistance at 1,500
- Nasdaq Composite (COMP - 2,935.05) - support at 2,400; resistance at 3,400
At the end of every market day, the staff at Schaeffer's Investment Research reviews the trading day in detail, covering major events and key market developments. Don't miss this critical, timely and insightful report. If you enjoyed today's edition of Market Recap, sign up here for free daily delivery straight to your inbox.