Ahmed Elbatrawy

Stocks rebound on Europe hopes

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NEW YORK (CNNMoney) — U.S. stocks bounced back Monday, after closing one of the worst weeks of the year, on renewed optimism over the ability of European leaders to manage their debt crisis.

Over the weekend, the Group of Eight nations met and reaffirmed their commitment to keeping Greece in the eurozone. And two opinion polls released in Greece reportedly put the pro-bailout party ahead of the anti-austerity Syriza party.

The combination of the G8 and the poll results was enough to boost sentiment across world markets, with European and Asian stocks eking out gains and the euro holding steady around $1.27 against the U.S. dollar.

“I don’t think we’re out of the woods, but it’s a step in the right direction,” said Elisabeth Afseth, a fixed income analyst with Investec in London, about the polls out of Greece. She said the next three weeks leading up to the June 17 Greek election are likely to be volatile for both equity and bond markets.

The Dow Jones industrial average (INDU) rose 63 points, or 0.5%. Blue chips, including Caterpillar (CAT, Fortune 500), Boeing (BA, Fortune 500) and Alcoa (AA, Fortune 500) led the gains on the Dow.

The SP 500 (SPX) gained 8 points, or 0.6%, and the Nasdaq (COMP) rose 21 points, or 0.8%.

Shares of Facebook (FB) plunged 11% to well below the $38 initial public offering price.

The sharp drop ‘weighed heavily’ on markets, said Anthony Conroy, head trader at ConvergEx Group, noting that the tech-heavy Nasdaq briefly slid into negative territory.

But trading will likely remain choppy as worries about Europe will continue to dominate trading this week.

After Greece failed to form a coalition government, concerns about the nation leaving the eurozone and how that would impact the rest of Europe have dominated global market sentiment.

An informal summit of European leaders is scheduled for Wednesday.

U.S. stocks closed lower Friday, after the euphoria surrounding Facebook’s Friday IPO had worn off. All three indexes clocked their worst weekly losses of the year last week.

World markets: European stocks extended their gains in afternoon trading. Britain’s FTSE 100 (UKX) jumped 0.5%, the DAX (DAX) in Germany rose 0.5% and France’s CAC 40 (CAC40) edged up 0.1%

Asian markets ended mixed. The Shanghai Composite (SHCOMP) edged 0.2% higher and Japan’s Nikkei (N225) ended up 0.3%. The Hang Seng (HSI) in Hong Kong shed 0.2%.

Companies: Yahoo (YHOO, Fortune 500) and China’s Alibaba Group have agreed to a $7.1 billion deal, in which the Chinese Internet giant will buy back half of Yahoo’s 40% stake in the company.

Speaking at a Deutsche Bank conference, JPMorgan Chase (JPM, Fortune 500) CEO Jamie Dimon said the firm would suspend its stock buyback program but would keep its dividend. Bank of America (BAC, Fortune 500) CEO Brian Moynihan is also slated to speak.

Lowe’s (LOW, Fortune 500) reported better-than-expected earnings but issued mixed guidance.

Campbell Soup (CPB, Fortune 500) posted a slight decline in earnings per share but performed slightly better than forecasts.

Economy: No major economic reports are expected in the U.S. on Monday.

Currencies and commodities: The dollar posted modest gains versus the euro, the Japanese yen and the British pound.

Oil for June delivery rose 39 cents to $91.87 a barrel.

Gold futures for June delivery jumped $1.20 to $1,593.10 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell Monday morning, pushing the yield up to 1.75% from the 1.70% level late Friday.  To top of page

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Ahmed Elbatrawy