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Wall Street bounces back but Europe woes linger
1 of 5. Traders work on the floor of the New York Stock Exchange, June 25, 2012.
Credit: Reuters/Brendan McDermid
NEW YORK |
NEW YORK (Reuters) - Major stock indexes bounced back on Tuesday, but trading was light with the outlook clouded by doubts before yet another summit to tackle the European debt crisis.
U.S. stocks partly recovered from losses of more than 1 percent on Monday, led by housing shares after stronger-than-expected data on home prices.
The consumer discretionary sector was the top gainer on the S&P 500, followed by energy shares, which were boosted by a 2.3 percent jump in Brent crude prices.
Traders remained cautious as Spanish short-term borrowing costs nearly tripled and U.S. consumer confidence fell in June to its lowest level in five months.
"Certainly in the United States stocks are nicely priced, and for a long-term investor it is an attractive entry point, but then what about these macro risks hovering around the market? I think it's having a dampening effect," said John De Clue, global market strategist at U.S. Bank's wealth management group in Minneapolis.
Spanish 10-year bond yields rose after demand at a shorter-term bill sale fell despite significantly higher yields. Hopes faded that the European Union summit later this week would produce game-changing measures to ease the debt crisis.
Madrid has formally asked for funds to bail out its banks in a move some see as a prelude for a full-blown bailout of the euro zone's fourth-largest economy.
Rupert Murdoch's News Corp (NWSA.O) said it was considering splitting into two publicly traded companies, and sources familiar with the matter said publishing would be separated from entertainment. Shares jumped 8.3 percent to $21.76 on volume of 73.1 million shares, making it the day's most actively traded stock on the Nasdaq.
The Dow Jones industrial average .DJI rose 32.01 points, or 0.26 percent, to 12,534.67. The S&P 500 Index .SPX gained 6.27 points, or 0.48 percent, to 1,319.99. The Nasdaq Composite Index .IXIC gained 17.90 points, or 0.63 percent, to 2,854.06.
About 5.9 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE Amex, below the daily average of 6.82 billion so far this year.
JPMorgan Chase & Co (JPM.N) shares rose 1.1 percent to $35.71 after Goldman Sachs added the bank to its conviction buy list. Morgan Stanley (MS.N), cut to "neutral" by Goldman, added 0.2 percent to $13.51.
The PHLX housing index .HGX jumped 2.6 percent after S&P/Case Shiller data showed home prices in 20 U.S. metropolitan areas gained 0.7 percent on a seasonally adjusted basis, topping economists' expectations for a 0.4 percent gain.
Facebook (FB.O) shares rose 3.2 percent to $33.10 a day before the underwriters of the online social network's recent IPO are expected to release research on the company.
Advancing issues beat decliners on the New York Stock exchange by about 9 to 5 while on the Nasdaq almost seven issues rose for every five that fell.
(Reporting by Rodrigo Campos; Editing by Kenneth Barry)
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Deteriorating US consumer sentiment is not to blame because US household wealth has plunged 40%. Wages are down 7.7%. That is reality, not sentiment. Unemployment remains high, and benefits are ending. Gasoline prices have remained high because of endless international crises. Summer has arrived after winter reached 90 degrees, and spring reached 117 degrees. Sunday was 102; Monday was 105; today is 105 and climbing; and summer lasts until September 22. The power companies warn that power use may reach maximum usage and force some business customers to close early to keep the grid on-line. Air conditioning companies make daily calls. People drive two blocks to stores because it is too hot to walk, and they lock their doors and leave the motors running to keep the cars cool for the return trips. Americans spend all of their spare money on food, gasoline, and air conditioning. They cannot afford to drive the US economy.
There are small crises like tornadoes, hurricanes, and floods. The warm winter and spring have brought insect infestations of crickets, ants, termites, and mosquitoes. Exterminators and bug sprays are another cost. Mosquitoes bring back West Nile Virus and treatment costs. In addition, there are fires that burn resources, homes, vehicles, and businesses, and they waste millions of man hours in unproductive work. These are all additional costs that prevent the driving of the US economy into recovery.
The drought and heat give additional problems. Water rationing is in effect in growing numbers of cities, but the worst problem for the US is the food. Agriculture is dying in increasing parts of the US, and livestock herds are being sold because feed costs are too high. Fishing is affected by oil spills, algae blooms, and excessive carbon dioxide absorbtion because fish cannot breathe carbon dioxide. China chose to deal with global warming with a massive irrigation project from 2001 to 2020 or 2025 that would allow China to feed 3 or 4 billion people with grain from irrigated fields and fish from canals and reservoirs. In 2011 China reached its grain target for 2020, 9 years early. US grocery stores have canned fish and frozen vegetables from China, so the US has a new source for its trade deficit with China. As the US, Mexico, Africa, the Middle East, India, and Australia become polluted deserts, China continues plans to develop water, agriculture, and aquaculture. For the US in 2012, it is one more cost and one more lost commercial opportunity that is leading the US into another recession.
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