NEW YORK |
NEW YORK (Reuters) – Stocks rose on Tuesday as investors snapped up beaten-down shares in the energy and industrial sectors while Spanish bond yields came off their highs, giving the market some relief.
The SP 500 index fell 6.3 percent for the month of May on concerns about the financial crisis in Europe and signs of a slowdown in the U.S. economy. Even after a $125 billion aid package to Spain that was unveiled over the weekend, the SP fell more than 1 percent on Monday as questions remained about the terms of the bank-rescue deal and the impact it could have on Spanish debt levels.
Trading was volatile. Wall Street dipped earlier as yields on Spain’s 10-year bond hit a euro-era high, pointing to stress in the nation’s debt markets shortly after the announcement of the European Union bailout over the weekend.
“Into their close, both Spanish and Italian bonds are bouncing off their (price) lows. The daily egg shells we walk on this week over Spain will, of course, be followed by Sunday’s election in Greece and what, if anything, the FOMC will announce next week,” said Peter Boockvar, equity strategist at Miller Tabak Co in New York.
The weekend elections in Greece are viewed as a major headwind that could result in the country leaving the euro zone.
Nicholas Colas, chief market strategist at the ConvergEx Group in New York, predicted swings in equities around the close of European markets “since that’s where all our catalysts are coming from.
“It is nice to see us holding above 1,300 (on the SP), which is an important number psychologically, but it is very possible that we see another disappointing selloff like yesterday,” he added.
The Dow Jones industrial average .DJI was up 98.32 points, or 0.79 percent, at 12,509.55. The Standard Poor’s 500 Index .SPX was up 8.43 points, or 0.64 percent, at 1,317.36. The Nasdaq Composite Index .IXIC was up 18.80 points, or 0.67 percent, at 2,828.53.
Volatility around the close of European markets is expected to persist until more clarity is received on the makeup of Greece’s government and the stability of Spain’s banking system.
The energy and material sectors, both heavily tethered to sentiment about Europe, were the top performers. An SP index of energy stocks .GSPE gained 0.7 percent and an SP index of materials stocks .GSPM advanced 1.1 percent.
Among the most active, Valero Energy Corp (VLO.N) rose 3 percent to $22.50 while Halliburton Inc (HAL.N) gained 1.3 percent to $27.86. U.S. Steel Corp (X.N) rose 1.7 percent to $18.19.
Shares of Michael Kors Holdings Ltd (KORS.N) jumped 3.8 percent to $39.64 after the designer clothing company reported a stronger-than-expected fourth-quarter profit and gave a full-year outlook that exceeded Wall Street’s forecast.
U.S. import prices fell 1 percent in May, their biggest drop in almost two years, as energy and food costs declined, according to Labor Department data. The slide in import prices matched economists’ forecast. Export prices fell 0.4 percent in May, compared with the forecast for a dip of 0.1 percent.
(Editing by Dave Zimmerman and Jan Paschal)