Dow Index looks to snap losing streak with 250-point rally
New York (Jun 10) US stocks were rallying Wednesday, with the main indexes recouping some of the losses from a four-day slump and on track to post biggest one-day gains in a month.
Analysts said the rally on Wall Street was due to a combination of weakening dollar, which boosted commodities, and fresh hopes that Greece’s creditors will release more bailout cash.
The S&P 500 SPX, +1.27% which stood alone among the main indexes in eking out the smallest of gains Tuesday, gained about 25 points, or 1.2%, to 2,105, with all of its 10 main sectors trading higher. Technology and financials stocks led the gains, rising more than 1.5%. Energy shares also rallied thanks to a continued gains in oil prices.
The Dow Jones Industrial Average DJIA, +1.41% jumped 250 points, or 1.4%, to 18,016, turning positive for the year. The Nasdaq Composite COMP, +1.38% gained 63 points, or 1.3% to 5,076.
Peter Cardillo, chief market economist at Rockwell Global Capital, said the bounce is mostly technical, but news that Greece may be reaching a deal also added to optimism.
“The market rally is mostly due to a combination of three things: the S&P 500 held its support level on Tuesday, the dollar weakened and oil rallied as well as some positive news from Greece,” Cardillo said.
James Abate, portfolio manager at Centre Funds, noted that the economy as a whole is picking up from its winter doldrums and the labor market is looking strong, however he is less convinced about stocks.
“To be bullish in this environment means we should expect [price-to-earnings] expansion and for that to happen we need to see an increase in appetite for stocks and interest rates to go down, neither of which is likely to happen,” Abate said.
“We believe that market is ripe for a substantial correction, given operating margins have peaked late last year,” Abate noted.
Chinese stocks left out of MSCI Index
Index provider MSCI says China’s stock markets still lack what it takes to be included in its emerging-market index.
In the absence of major economic news, equity markets followed developments in currency and commodity markets. The slide in the dollar helped boost commodity prices, which in turn gave a lift to U.S. energy-related companies.
Shares of energy companies NRG Energy, Inc. NRG, +3.39% Transocean Ltd. RIG, +1.60% and Halliburton Co. HAL, +2.14% rallied, gaining 4%, 3.4% and 3.4% respectively.