Tim Cook, Apple CEO, giving the keynote address at the Worldwide Developers Conference - Image credit: Getty Images via @daylife)
Stocks managed to pull off a rally on Tuesday, after falling in the aftermath of the Spanish bank bailout. ECB support for a Eurozone-wide deposit guarantee helped improved sentiment, but yields on Spanish 10-year bonds still hit all-time intraday highs. Falling import prices and comments from oil ministers ahead of an OPEC meeting contributed as well.
All three major equity indices in the U.S. were in positive territory, after surging in early trading. The Dow led the charge, up 0.8% to 12,511 points. The Nasdaq gained 0.8% as well, to 2,831, while the S&P 500 was up 0.7% to 1,318.
Europe continues to dominate market attention. The EU’s intention to lend $125 billion to Spain to recapitalize its banks was received skeptically by markets on Monday, failing to spark risk rallies. On Tuesday, though, a report by the ECB suggesting it would back Eurozone-wide bank deposit guarantees fostered positive risk taking; still, Spanish 10-years hit a record 6.78%.
In the U.S., the Bureau of Labor Statistics announced import prices fell 1% in May, marking their biggest decline since June 2010. Among the reasons is the fall in commodity prices, particularly crude oil. Interestingly, markets are keeping an eye on the coming OPEC meeting, where a showdown between the world’s major oil producers is expected. Saudi Arabia, the biggest producer and one of the politically stronger members of the cartel, is expected to push for keeping production steady, at around 30 million barrels per day. Oil prices firmed on Tuesday, with WTI up 1% to $83.53.
Shares in Apple were in positive territory a day after the company announced new products in its Worldwide Developers Conference. The company now run by Tim Cook unveiled a new MacBook Pro with retina display (like the one used on iPhones and iPads), along with new iPhone software including an upgraded Siri and Apple’s own map software, opening a new battleground with Google. Apple was up 0.7% to $575.03, while Google slid 0.6% to $564.99.
Another big tech name making headlines is Facebook. Shares in the social network founded by Mark Zuckerberg are still struggling after what has been called a botched IPO. On Tuesday, the company defended its ad platform with the release of a comScore report partially commissioned by Facebook that showed that fans of a brand were more likely to purchase the brand, according to WSJ. Facebook was up 1.9% to $27.52.
On Wednesday, investors will have to keep an ear out for JPMorgan Chase CEO Jamie Dimon as the banker heads to Capitol Hill to testify. Dimon will be grilled by the Senate Banking Committee on the more than $2 billion lost by a JPMorgan unit working in London. Specifically, Dimon will have to respond as to how much he knew about the level of risk his bank was taking, and about the trades made by the trader dubbed the London Wale, Bruno Iksil.
Stocks turn higher on stimulus hopes - MSN Money
By Andrea Tse
Stocks rose Tuesday on talk of more stimulus for the U.S. economy, reversing previous losses on news that Fitch had downgraded the long-term ratings of 18 Spanish banks.
The Dow Jones Industrial Average ($INDU) was up 95 points at 12,506. S&P 500 ($INX) shares were up 8 points at 1,318, and the Nasdaq ($COMPX) was up 19 points at 2,828.
U.S. stocks shed more than 1% Monday as initial excitement about Spain's bank bailout plan was usurped by worries over the country's increasing debt load. Uncertainty surrounding the outcome of this weekend's elections in Greece also soured sentiment.
Trading is expected to remain volatile ahead of Sunday's election in Greece, which could still result in the country's leaving the eurozone, The Associated Press reported.
Spain's benchmark borrowing rate reached its highest level since the country joined the euro after Fitch downgraded 18 domestic banks, AP reported. Its 10-year bond yield traded at 6.78%. Fitch attributed its bank downgrades to a previous downgraded of the Spanish sovereign debt on June 7.
Federal Reserve Bank of Chicago President Charles Evans said in an interview with Bloomberg TV that he favors "pretty much any accommodative policy" and said that extending Operation Twist would be useful.
Economists at Capital Economics noted that unless the economy loses a lot more momentum or the financial contagion from the Europe debt crisis turns out to be much greater than expected, a third round of Fed quantitative easing is unlikely.
The economists added that the Fed may respond to the weaker tone of the incoming data by announcing a short extension to its Operation Twist program at next week's Federal Open Market Committee meeting.
The FTSE in London was up 0.71%, and the DAX in Germany was up 0.41%.
The Bureau of Labor Statistics reported that U.S. import prices fell 1% in May, as expected, after no change the previous month. Lower fuel and nonfuel prices contributed to the May decrease in overall import prices. Export prices also declined in May, falling 0.4% after a 0.4% increase in April.
"Overall, a modest read on inflation pressure, keeping with the trend as energy prices continue to decline," said Ian Lyngen senior bond strategist at CRT Capital.
The Treasury Department's budget report for last month is due out at 2 p.m.
Hong Kong's Hang Seng index settled down 0.4%, and the Nikkei in Japan shed 1%.
In corporate news, Verizon (VZ) announced it will drop most of its phone plans for pricing schemes that allow consumers to share data usage among up to 10 devices, The Associated Press reported. The new plans will let users add tablets and laptops to their plans, as well as family members' phones. The change will take effect June 28.
Michael Kors (KORS), the women's apparel maker, reported fourth-quarter net income Tuesday of $43.6 million, or 22 cents a share, up from year-earlier earnings of $17.4 million, or 10 cents a share.
Excluding a credit related to the company's initial public offering, Michael Kors had fourth-quarter net income of $41.6 million, or 21 cents a share. Fourth-quarter revenue was $380 million. Analysts, on average, expected Michael Kors to post fiscal fourth-quarter earnings of 16 cents a share on revenue of $360.9 million.
The retailer also said it expects first-quarter earnings of between 18 cents a share and 20 cents a share, and full-year profit of between $1.08 and $1.12 a share. Analysts expect first-quarter profit of 17 cents a share and fiscal-year earnings of 98 cents a share.
Juniper Networks (JNPR), the networking equipment maker, announced a new $1 billion buyback authorization.
Texas Instruments (TXN) raised the low end of its second-quarter revenue and earnings estimates and forecast revenue of between $3.28 billion and $3.42 billion, compared with prior guidance of $3.22 billion to $3.48 billion. Analysts are expecting sales of $3.35 billion. The company said it now expects earnings of between 32 cents and 36 cents a share, compared with a previous estimate of 30 cents to 38 cents. Analysts expect 41 cents a share.
Seagate Technology (STX) saw shares rise Monday after David Einhorn of Greenlight Capital disclosed ownership of more than 23 million shares, or a 5.4% stake, in the company. That's an increase from the 14.5 million shares, or 3.4% stake, that Einhorn disclosed as of March 31.
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