U.S. Stocks Surge on Housing News, Greek Hopes

June 28, 2011
Nike paces IW 50, up 10% on Q4 earnings.

U.S. stock markets rallied on Tuesday, with all three major indices leaping more than 1% amid optimism that Europe would reach a deal to avoid a destabilizing default by Greece.

The Dow Jones Industrial Average rose 145.13 points (1.21%) to close at 12,188.69.

The broader S&P 500 jumped 16.57 points (1.29%) to 1,296.67, while the tech-heavy Nasdaq Composite climbed 41.03 points (1.53%) to 2,729.31.

Investors welcomed reports that progress was being made in talks to prevent a Greek default, in part by rolling over a large portion of Greece's debt into 30-year bonds.

Market participants were hopeful that Greece's government would succeed in pushing through unpopular austerity measures, despite a general strike called by unions that led to street clashes in Athens.

The rally was driven by "optimism that Greece will come through with passing their austerity plan," said Scott Marcouiller, chief technical market strategist with Wells Fargo Advisors.

Energy stocks jumped along with a rebound in oil prices, with ExxonMobil rising 2.1% and Chevron gaining 1.4% after the world's two major oil benchmarks -- West Texas Intermediate in New York and Brent North Sea crude in London -- both gained more than $2 a barrel.

Among stocks in IndustryWeek's 50 Best Manufacturing Companies list, Nike Inc. was the biggest winner.

Shares of Nike jumped 10.14% ($8.28) a day after the Beaverton, Ore.-based athletic-footwear manufacturer's fourth-quarter earnings exceeded analysts' expectations.

Bond prices dropped as investors left the safety of U.S. government debt for riskier assets such as stocks.

The yield on the 10-year U.S. Treasury note rose to 3.05% from 2.93% on Monday, while that on the 30-year bond climbed to 4.33% from 4.28%.

Uptick in Housing Prices

Earlier in the day, the S&P/Case-Shiller Home Price Indices showed the first month-on-month uptick in U.S. housing prices since July, offering hope that the housing market -- a key pillar of the economy -- might be bottoming out.

Average home prices in 20 major cities grew 0.7% from March to April, the monthly report showed. But they remained 4% below their April 2010 level, reflecting the deeply depressed state of the market.

"Home prices should remain subdued in the medium term despite a modest and very gradual improvement in residential real estate sector," said Inna Mufteeva, an economist with Natixis.

Copyright Agence France-Presse, 2011

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