Wall Street Extends Global Rally With 2% Advance

Bikram Pandey
29 Jun, 2012
New York City

Stocks on Wall Street surged after European leaders offered emergency steps to support direct bank lending and passed stimulus measures. Commodities led the surge and crude oil soared 9% and gold gained 3%. For the week, the S&P 500 index gained 1.6%.

[R]4:00 PM New York – Stocks on Wall Street surged after European leaders offered emergency steps to support direct bank lending and passed stimulus measures. Commodities led the surge and crude oil soared 9% and gold gained 3%. For the week, the S&P 500 index gained 1.6%.[/R]

U.S. indexes advanced global rally after European leaders agreed to emergency measures and extend direct lending to Spanish banks and pass stimulus measures. Commodities surged and energy complex and resources linked stocks led the advance.

The S&P 500 index gained 2.1% and for the week closed up 1.6% and the Nasdaq soared 2.7% and for the week gained 1.2%.

Market sentiment was positive right from the get go after European leaders worked till 4:00 a.m. in Brussels to work out an agreement to deepen banking union and also offered loans to Spain with no additional austerity measures.

The move surprised the market after Germany relented from its demand for a preferred lender condition for Spanish banks.

Stocks on Wall Street accelerated gains in the late afternoon after commodities staged a rally and crude oil futures shot up 9% and gold and silver added more than 3%.

Around the world, the benchmark index in Germany surged 4.3% and in France soared 4.8% and in UK added 1.4%. The indexes in India and Hong Kong added more than 2% and in Japan increased 1.5%.

In corporate news, Research in Motion reported another quarterly loss and a decline in revenues and said it plans to slash 5,000 jobs. Analysts raised the prospect of company facing severe cash crunch as early as next quarter and said that the company may run out of time.

On the earnings front, Accenture third quarter net increased 11% and narrowed fiscal earnings guidance and home builder KB Home second quarter net loss narrowed. Nike plunged after it reported worse than expected earnings. Anheuser Busch InBev agreed to buy remaining stake in Mexico-based Modelo for $20 billion.

ServiceNow Inc got a strong start on its debut on the New York Stock Exchange and jumped 30% on the first day of trading. The cloud computing service provider offered 11.65 million shares at $18 each and raised $210 million. Several key venture capital firms and early investors decided to not sell their stake in the public offering.

European markets staged a rally after regional leaders agreed to use rescue funds to lend directly to Spanish banks and approved €120 billion stimulus program.

Japanese stocks extended gains for the second day as short sellers covered positions and international investors increased exposure to domestic stocks. Nikkei gained 1.5% on Friday but fell 10.7% in the quarter, worst since the third quarter of 2011.

Australian benchmark index gained 1.2% and a rally across Asia lifted markets after European leaders agreed to set up a regional banking authority. David Jones, the high end department store retailer soared 15% after a UK based private equity firm bid $1.5 billion for the company.

Commodities, Bonds and Currencies

The yield on 10-year bond increased to 1.66% and on 30-year bond rose to 2.76%.

The U.S. dollar inched up to $1.2567 to a euro and fell against the Japanese yen to 79.80 yen.

Immediate delivery futures of Texas crude oil soared 9.3% or $7.27 to $84.94 a barrel and Brent crude surged $6.92 to $98.28, futures of natural gas increased 10 cents to $2.82 per mbtu and gasoline price increased 12.84 cents to 274.20 cents a gallon.

In metals trading, copper rose 18.1 cents to $3.51 per pound, gold jumped $49.70 to $1,600.10 per ounce and silver increased $1.22 at $27.53.