U.S. Indexes Gain 1% as QE2 Ends; Greek Worries Ease for Now

Bikram Pandey
30 Jun, 2011
New York City

U.S. stocks closed higher on the last day of the second quarter. The day also marks the end of second round of easy monetary policy that lasted seven months. The controversial QE2 program lifted stocks by 26%, gold by 22% and the dollar declined 10%. For the year the S&P 500 index gained 4.9%.

[R]4:05 PM New York – U.S. stocks traded higher on the last day of the month and the second quarter. The day also marks the end of second round of easy monetary policy that lasted seven months. The controversial QE2 program lifted stocks by 26%, gold by 22% and the dollar declined 10%.[/R]

U.S. indexes traded higher after weekly jobless claims fell 1,000 and pending home sales increased in May. Jobless claims were above 400,000 for the 12th week in a row.

In June, the S&P 500 index declined 2% and at the end of the second quarter decreased 0.4%. The Nasdaq index fell 0.4% in the quarter and decreased 2.2% in June. The Dow close flat in the quarter.

The Federal Reserve Bank officially ends its easy monetary policy after the completion of its last bond buyback program today.

In the seven months to June, the second round printing money also called quantitative easing pumped $600 billion in the economy which largely ended up lifting stocks by 26% and gold by 22%. In the period, the dollar declined 10% and the yield on 10-year on Treasury bonds increased to 3.1% from 2.5%.

In deals news, News Corp sold social networking site Myspace for $35 million to Specific Media and reportedly lost nearly $1 billion since it acquired six years ago. CA Inc agreed to acquire Interactive TKO for $330 million.

On the earnings front, Constellation Brands first quarter net income surged 52% to $74.5 million. McCormick second quarter net income grew to $73.6 million.

Across the Atlantic, the European indexes extended gains after the Greek parliament approved the austerity measures and in the second vote approved privatization plan of 78 billion euros insisted by the European Union and the European Central Bank as conditions to release the last tranche of the 12 billion euros bailout fund.

In European deals update, AkzoNobel planned to acquire Schramm Holding for €142 million. Barclays agreed to sell private equity fund interests worth €520 million to AXA Private Equity.

Euro area inflation remained flat at 2.7% in June and German jobless rate fell. French producer prices rose less than estimated in May. Hungary’s surplus improved and Denmark GDP contracted in the first quarter.

The UK indexes rose after home prices remained flat and consumer confidence dropped in June. Lloyds surged 9% after it proposed to cut 15,000 jobs to deliver £1.5 billion of annual savings in 2014.

Stocks in Japan gained for the third day in a row on the expectation of faster improvement in supply chain and manufacturing output. Utilities gained on the talks of restarting at least one nuclear power plant. The Nikkei declined 0.4% in the first half.

The Australian stocks scaled higher after Greece approved deeply unpopular austerity measures. The benchmark index soared 7% in the first half of the year as mining companies led gainers. Insurance Australia Group estimated margins between 8% and 10% in the current year.

Commodities, Bonds and Currencies

The 10-year U.S. bond yield decreased to 3.12% and 30-year U.S. bond traded fell to 4.37%.

The U.S. dollar decreased to $1.452 to one euro and gained against the Japanese yen to 80.47 yen.

Immediate delivery futures of Texas crude oil increased $0.24 to $95.01 a barrel and futures of natural gas increased 0.06 cents to $4.37 per mbtu and gasoline price increased 2.19 cents to 303.16 cents a gallon.

In metals trading, copper increased 5.35 cents to $4.27 per pound, gold fell $9.20 to $1,501.20 per ounce and silver decreased $0.02 to $34.74.