US Stocks Pare Gains After 'Credit Event' Ruling On Greek Debt
March 09 2012 - 03:55PM
Dow Jones News
U.S. stocks pared gains in afternoon trading after a financial
industry group ruled that Greece's debt restructuring constituted a
"credit event," which will likely trigger a series of payouts
between buyers and sellers of credit default swaps on Greek
sovereign debt.
The afternoon drop erased some of the market's gains from
earlier in the day, after upbeat news on jobs and the Greek debt
restructuring. Still, the Dow Jones Industrial Average was up 22
points, or 0.2%, to 12930, in late afternoon trading. The Standard
& Poor's 500-stock index was up 5.5 points, or 0.4%, to 1371,
and the Nasdaq Composite gained 17 points, or 0.7%, to 2988.
All 10 of the S&P's sectors were higher, led by financial
and consumer-discretionary shares. J.P. Morgan Chase led blue chips
higher, rising 2.2%.
"From a sentiment standpoint, this is buy the rumor, sell the
news. We've had anticipation all week on the Greek vote as well as
the nonfarm payrolls numbers," said Phil Orlando, equity strategist
at Federated Investors. "To some degree, the strength we've seen
over the past few days seems to have priced in some of the news,
and that's why we're not seeing an explosive move today."
The Labor Department said nonfarm payrolls rose more than
expected in February, but the increase was less than last month's
rise. The unemployment rate remained unchanged at 8.3%.
"By any stretch, this is an encouraging report," said Anthony
Chan, chief economist with J.P. Morgan Private Wealth Management.
"Lots of jobs creation, with upward revisions in the prior months,
and I'm encouraged by the fact that more people are joining the
labor force and the unemployment rate is not going up."
Also, data showed wholesale inventories increased in January, an
indication that companies anticipate increased demand for products.
Economists surveyed by Dow Jones Newswires had forecast a 0.6%
increase.
Still, stock gains were tempered by downbeat news on the U.S.
trade deficit, which widened in January to its highest level in
more than three years because of plunging exports to China and the
euro zone.
European markets edged mostly higher, with the Stoxx Europe 600
closing 0.5% higher after Greece secured enough debt-swap
commitments from private creditors to restructure its debt and
receive bailout funds.
Asian bourses were broadly higher on the back of U.S. gains and
optimism toward Greece, with Japan's Nikkei Stock Average rising
1.7% to close at its highest level in seven months. China's
Shanghai Composite gained 0.8%.
Crude-oil prices settled 0.8% higher at $107.40 a barrel, while
gold prices settled up 0.8% at $1,710.90 a troy ounce. The dollar
gained ground against the euro and yen. The yield on the 10-year
Treasury note rose to 2.037%.
In corporate news, Starbucks introduced its first at-home,
single-cup coffee-making machine, named the Verismo system, that
makes espresso beverages and brewed coffee. The new system will
compete with the Keurig brewer made by Green Mountain Coffee
Roasters. Green Mountain Coffee slumped 15%, while Starbucks rose
2.9%.
Shares of the women's apparel retailer that operate Ann Taylor
stores, Ann, rose 6.9% after per-share earnings slightly beat
estimates, even as fourth-quarter earnings fell 73%.
Smith & Wesson Holding Corp. shares shot up 22% after the
gun maker swung to a fiscal third-quarter profit on improved sales
volume and lower operating expenses.
Texas Instruments lowered its expected ranges for revenue and
earnings for the current quarter, citing lower demand for wireless
products. The semiconductor maker fell 1.1%.
Also in the chip industry, Altera indicated that the revenue
outlook for the current quarter had weakened, citing continued
softness in sales to wireless customers and timing issues in the
military market. Shares rose 1.5%.
Molycorp said it agreed to buy Canadian rare-earth mining
company Neo Material Technologies to gain greater exposure to
China. Molycorp advanced 15%.
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