Wall Street rises on hopes for Cyprus deal, but dips for week

NEW YORK Fri Mar 22, 2013 5:49pm EDT

Traders work on the floor at the New York Stock Exchange, March 21, 2013. REUTERS/Brendan McDermid

Traders work on the floor at the New York Stock Exchange, March 21, 2013.

Credit: Reuters/Brendan McDermid

NEW YORK (Reuters) - Stocks rose on Friday on optimism that a deal to bail out Cyprus would be reached, but ended lower for the week for just the second time this year.

Nike (NKE.N) shares jumped 11.1 percent to $59.53 and hit a record intraday high at $60.23, a day after the athletic shoe maker reported stronger-than-expected results. The news lifted consumer discretionary stocks, with the S&P 500 consumer discretionary sector index .SPLRCD ending up 1.2 percent, leading the S&P 500 higher.

Cyprus was close to a deal to raise billions of euros and unlock a bailout from the European Union that could avert a financial meltdown and its exit from the euro, its ruling party said.

The lingering concern among investors is that were Cyprus to leave the euro zone, it would open the door for other larger countries to follow suit and debilitate the bloc.

"If, in fact, the talk of departures from the euro were to get front and center, that could scare investors at the macro level, but it's unlikely the Cyprus thing turns into that," said Sandy Lincoln, chief market strategist at BMO Asset Management US in Chicago.

The S&P 500 ended the week down 0.2 percent, which was just its second weekly decline of the year, as investors were alarmed that Europe's debt crisis would again roil markets over Cyprus' financial troubles.

Stocks have been gaining on news of a strengthening recovery and the view the Federal Reserve will continue to support the economy. The S&P 500 is up 9.2 percent for the year.

The Dow Jones industrial average .DJI rose 90.54 points, or 0.63 percent, to end at 14,512.03. The Standard & Poor's 500 Index .SPX gained 11.09 points, or 0.72 percent, to finish at 1,556.89. The Nasdaq Composite Index .IXIC advanced 22.40 points, or 0.70 percent, to close at 3,245.00.

For the week, the Dow dipped just 0.01 percent, while the Nasdaq slipped 0.1 percent.

Finance ministers from the 17-nation euro zone are due to hold talks Sunday about a revised bailout of Cyprus, two euro- zone sources told Reuters.

"Whether you're talking about the euro zone or Washington, D.C., the market has been conditioned to these crises being resolved in the 11th hour or kicked down the road," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

The day's other big gainers included shares of Tiffany & Co (TIF.N), which reported a slightly higher profit for the quarter that included the holiday season, and said the pace of its worldwide sales growth would pick up this year. Tiffany's stock rose 1.9 percent to $69.23.

Shares of food makers Mondelez International (MDLZ.O) and PepsiCo (PEP.N) rose on Friday after a UK newspaper reported that activist shareholder Nelson Peltz has been building stakes in both companies.

Mondelez rose 4.1 percent to $29.73. PepsiCo gained 3.3 percent to $78.64.

Other upbeat corporate news came from Micron Technology (MU.O). It posted a quarterly net loss on Thursday, but the chipmaker said the outlook for memory chip prices is improving. The stock gained 10.7 percent to end at $10.04 after hitting an intraday high of $10.27 - its highest in almost two years.

Volume was roughly 5.4 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the 2012 average daily closing volume of about 6.45 billion.

Advancers outpaced decliners on the NYSE by about 19 to 11 and on the Nasdaq, by about 3 to 2.

(Reporting by Caroline Valetkevitch; Additional reporting by Chuck Mikolajczak; Editing by Jan Paschal)

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Comments (2)
TommyPaine wrote:
THE REAL LESSON FROM CYPRUS: Anyone who still thinks that the PSI requirement for the bailout of Greece last year was a one-off event is burying his head in the sand — after Cyprus it should be clear that Germany and its northern Eurozone allies will not permit the future bailout of any failing Eurozone economy unless that bailout includes Private Sector Involvement (PSI).

SO WHAT DOES THAT MEAN FOR SPAIN or ITALY? It means that the ECB’s OMT program is not a free lunch for those who hold Spanish sovereign debt. Before the ECB will buy a single bond, bondholders are almost certain to be forced to take a painful “haircut.” Only AFTER they have had their holdings slashed by many percent, will the ECB step in and start propping up prices through unlimited purchases.

Thus, the real market-roiling feature of the Cyprus crisis in not merely that bank deposits are not sacrosanct. No, the real danger is that those who hold Eurozone sovereign debt will start recognizing that Mario Draghi’s promise to save the Euro is not the same as a promise to save those who hold Spanish or Italian bonds.

Mar 22, 2013 8:35am EDT  --  Report as abuse
Sean540 wrote:
Greece is helping out Cyprus and people think the problem is resolved? too funny!

Am i missing something? This is like to a panhandler lending money to another panhandler?

Mar 22, 2013 11:37am EDT  --  Report as abuse
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