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21 June 2011
Stocks rise for fourth straight day on Greek hopes
Stan Choe, AP Business Writer, On Tuesday June 21, 2011, 12:49 pm
NEW YORK (AP) -- Stocks rose for a fourth day Tuesday on hopes that a vote of confidence in the Greek government later in the day will help the country avoid a default.
The Standard & Poor's 500 index rose 15 points, or 1.2 percent, to 1,294 in afternoon trading. The index has gained 2.3 percent over the last four days, its best stretch since April.
The Dow Jones industrial average rose 98, or 0.8 percent, to 12,178. The Nasdaq composite rose 48, or 1.8 percent, at 2,678.
Materials producers, such as aluminum producer Alcoa Inc., and other industries whose profits are closely tied to economic growth made the biggest gains. Utility companies lagged as investors had less appetite for lower-risk industries whose profits tend to be steadier.
The results of the confidence vote in Greece's new government will be announced after U.S. markets close. A successful vote would reassure investors that the country will push through budget cuts required for getting the latest installment of emergency loans. Markets have been jittery since early May that Greece could default on its debt, which would hurt the banks that own Greek bonds and disrupt global financial markets.
The Federal Reserve also begins its two-day policy meeting Tuesday. Economists expect it to keep interest rates at record lows, but many don't expect the central bank to announce another round of bond-buying to help boost the economy.
U.S. stocks are emerging from a slump that began in early May. Reports since then have shown the economy has weakened. Home prices have dropped, manufacturing growth has slowed and the job market remains weak. The National Association of Realtors reported Tuesday that sales of previously occupied homes fell last month to their lowest level of the year.
"One of the reasons we're more positive than negative on stocks is that there's so much bad news priced into the markets right now," said Eric Thorne, an investment adviser and senior vice president at of Bryn Mawr Trust Wealth Management, which has $4 billion in assets under management. "The bar has been set so low for housing and jobs that it makes us feel like we may be able to jump over that low bar."
Another reason stocks are rising is that analysts expect corporate earnings growth to remain strong despite weakness in parts of the U.S. economy. Analysts surveyed by FactSet forecast that companies in the Standard & Poor's 500 index will earn 14 percent more per share in the second quarter compared to last year. Most large U.S. companies begin reporting quarterly results in early July.
Carnival Corp. rose 3.7 percent after the cruise operator reported revenue and earnings that beat expectations.
Best Buy Co. rose 3.1 percent after increasing its dividend 7 percent. The electronics retailer also approved a program to buy back up to $5 billion of its stock.
Walgreen, the biggest U.S. drugstore chain, fell 5 percent after saying negotiations to stay in Express Script's pharmacy provider network have reached an impasse. Their deal, worth $5.3 billion in revenue this fiscal year, expires at the end of 2011.
European stocks climbed. The gains accelerating through the day after U.S. stocks moved higher. France's CAC 40 index rose 2 percent, and Germany's DAX index rose 1.9 percent.
