* Volatile trading before weekend Greek elections
* Spanish and Italian bond yields off highs
* Michael Kors stock rallies after results, outlook
* Dow up 1 pct, S&P 500 up 0.8 pct, Nasdaq up 0.8 pct
By Edward Krudy
NEW YORK, June 12 U.S. stocks continued to take
their cues from Europe's troubled debt market on Tuesday,
staging a comeback rally as volatile Spanish bond yields came
off earlier highs.
Trading has been choppy this week as investors agonize over
the effectiveness of the $125 billion bailout for Spanish banks
agreed over the weekend.
Economically sensitive cyclical sectors that had sold off
recently were the strongest performers, suggesting investors
were seeing value in the market, while traders were looking for
an oversold bounce as the S&P 500 slipped back toward 1,300.
Materials, financials and industrial sectors all gained more
than 1 percent. Boeing Co led the Dow, climbing 3.4
percent, helped by an upgrade by Sanford C. Bernstein, which
said it saw a better outlook for the company's new Dreamliner
For the week so far, the S&P 500 has lost 0.5 percent.
"We are watching and waiting to see what comes out of Europe
just like everyone else," said Peter Jankovskis, co-chief
investment officer at OakBrook Investments LLC in Lisle,
The Dow Jones industrial average gained 125.34
points, or 1.01 percent, to 12,536.57. The Standard & Poor's 500
Index rose 10.53 points, or 0.80 percent, to 1,319.46.
The Nasdaq Composite Index added 22.53 points, or 0.80
percent, to 2,832.26.
The S&P 500 index lost 6.3 percent in May on concerns about
the European financial crisis and signs of a U.S. economic
Even after the EU aid package for Spain agreed over the
weekend, the S&P 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 on Tuesday. 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 bailout
Investors are also staring down the barrel of upcoming
elections in Greece. The weekend ballot is viewed as a major
risk that could result in the country leaving the euro zone, but
it could also spark a rally if the outcome favors Greece's
bailout agreement with international lenders.
"It is nice to see us holding above 1,300 (on the S&P),
which is an important number psychologically, but it is very
possible that we see another disappointing sell-off like
yesterday," said Nicholas Colas, chief market strategist at the
ConvergEx Group in New York,
Nasdaq halted short-sales of Zynga Inc as
shares of the social gaming company plummeted 11.8 percent on
increased concerns that the craze for games on Facebook
has already peaked.
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.
In company news on Tueday, shares of Michael Kors Holdings
Ltd jumped 5 percent to $40.07 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.