US stocks recover on Greece hopes
US stocks posted gains for the fourth day yesterday on growing hopes that Greece will avoid a debt default, adding momentum to the market’s recent rebound.
The Nasdaq had its biggest percentage gain since October, while the S&P 500 marked its best day in two months in what investors believe could be continued short-term buying from deeply oversold levels.
The Nasdaq reclaimed positive territory for the year and led the market’s advance, boosted by a jump in semiconductor stocks. A semiconductor index shot up 2.5 per cent, its best gain since April.
Consensus grew that Greek prime minister George Papandreou’s cabinet would survive a confidence vote after the US market close. The confidence vote is seen as the first step in moving closer to a resolution of Greece’s debt crisis.
It could pave the way for more aid and also remove a source of constant worry about global banks’ exposure to the euro zone’s debt problems. The PHLX KBW Bank Index gained 1.1 per cent after touching a 52-week high earlier in the day.
“If you’re an investor, you don’t want this Greek debt crisis to touch off another round of financial contagion around the world,” said Michael Sheldon, chief market strategist of RDM Financial, in Westport, Connecticut.
Volume was lighter than normal, however, with just 6.69bn shares traded on the New York, Nasdaq and NYSE Amex exchanges, compared with a daily average of 7.58bn.
The Dow Jones industrial average rose 109.63 points, or 0.91 per cent, to 12,190.01 at the close. The Standard & Poor’s 500 Index gained 17.16 points, or 1.34 per cent, to 1,295.52. The Nasdaq Composite Index climbed 57.60 points, or 2.19 per cent, to 2,687.26.
The Nasdaq ended Tuesday’s session above its 50 and 200-day moving averages, for the first time since 31 May.
The Dow and the S&P 500 finished last week with gains after six weeks of declines. The Nasdaq, however, ended the week in the minus column.
The S&P 500 is down five per cent since its 2 May high.
After nearing its 200-day moving average on Monday, the S&P 500 rebounded solidly above the level. Analysts saw 1,360 as the next technical level on the upside.