Wall Street edges up in choppy day
US stocks closed a volatile, lightly traded session slightly higher yesterday, with sentiment continuing to shift with the latest headline from Europe.
Wall Street spent most of the session lower before rebounding after Juergen Stark, a member of the European Central Bank’s Executive Board, said the region’s debt crisis might be overcome in “one or two years at the latest”.
In a signal that investors remain cautious, the strongest performers were healthcare and telecommunications stocks, both considered defensive sectors. The S&P Health Care sector rose 1.2 per cent, with Pfizer gaining 2.1 per cent to $20.07.
Volatility in the stock market has become more closely correlated with shifts in European bond markets, another sign of Europe’s influence on US equities.
“Given the overhang that Europe has been having on equities, stocks are going to be subject to intraday moves based on innuendo or conjecture as much as fact,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
“Any news that’s viewed positively is going to move the market, but I don’t trust the move. We could just as easily fall back down.”
The Dow Jones industrial average was up 85.22 points, or 0.71 per cent, at 12,068.46. The Standard & Poor’s 500 Index was up 7.89 points, or 0.63 per cent, at 1,261.12. The Nasdaq Composite Index was up 9.10 points, or 0.34 per cent, at 2,695.25.
The latest source of anxiety is Italy, where Prime Minister Silvio Berlusconi defied pressure to resign, keeping markets on edge before a key parliamentary vote on budget reforms.
Volume was light, with about 6.3bn shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s daily average of 8.47bn.
Adding to the uncertainty, Greece’s outgoing Socialist prime minister and conservative opposition leader raced to forge a coalition government and implement a new bailout programme.
Equities have been very sensitive to headlines from Europe, especially with a light US economic calendar this week and as earnings season winds down.
The CBOE Volatility Index fell 0.9 per cent after rising earlier in the session. Fresh worries about sovereign debt default have boosted the stock market’s volatility.