By Steven Russolillo and Min Zeng
Another day, another headline-driven market.
Stocks and the euro are trading around session highs this afternoon, while Treasurys suffer another leg down. Making the rounds is a report from the the Guardian, saying Germany is set to allow the euro-zone bailout fund to buy troubled countries’ debt.
Such a move is seen as an increasing willingness among European leaders to share debt burdens. It could alleviate some pressure on Spain and Italy, which have seen government bond yields shoot higher in recent weeks.
UPDATE: FT’s Alphaville blog is skeptical of the Guardian story, essentially pointing out the bailout fund already has the right to buy government bonds and lend directly to governments.
Seems like there’s a lot of uncertainty surrounding this issue, yet for today, investors are still in risk-on mode.
2nd UPDATE: Another news outlet is throwing cold water on the Guardian story. Reuters is reporting a German government official says there were no discussions at the G20 meeting about plans to use rescue funds to buy government bonds.
Let the headline roulette continue.
The Dow Jones Industrial Average has trimmed earlier gains, recently rising 111 points. Bank of America, Microsoft, Caterpillar and J.P. Morgan are leading the rally. The S&P 500 gains 1.4% and the Nasdaq Comp rises 1.5%.
The euro it at $1.2727 from $1.2577 late Monday, according to EBS via CQG.
While the situation is still fluid, any positive headlines now feed into hopes of policy makers taking actions to cope with the debt crisis. Investors are awaiting the G-20 communique later today and the FOMC statement Wednesday.
The 10-year note is now 13/32 lower, yielding 1.628%.
Here’s the story from the Guardian:
Angela Merkel is poised to allow the eurozone’s €750bn bailout fund to buy up the bonds of crisis-hit governments in a desperate effort to drive down borrowing costs for Spain and Italy and prevent the single currency from imploding.
Germany has long opposed allowing the eurozone’s rescue fund, the European Financial Stability Facility, to lend directly to troubled eurozone countries, fearing that Berlin would end up paying the bill, and the beneficiaries would escape the strict conditions imposed on Greece, Portugal and Ireland.
But Merkel has come under intense pressure as financial markets have pushed up borrowing costs for Spain to levels that many analysts see as unsustainable.
Analysts are likely to see the decision as the first step towards sharing the burden of troubled countries’ debts across the single currency’s 17 members, though it falls short of the “eurobonds” proposed by the European commission president José Manuel Barroso.
World stocks mixed, euro higher amid Spain, Greece strains - Yahoo! Eurosport
World stocks were mixed and the euro struggled higher versus the dollar despite growing strains on Spain on top of worries for Greece's eurozone future.
European equities rose in morning deals after Asian indices mostly closed lower as the leaders of the world's major economies embarked on the final day of the G20 summit determined to kickstart growth and the eurozone crisis.
Analysts were still betting on Greece exiting the European single currency despite weekend elections which saw Greece's two main pro-austerity parties win enough votes to form a government.
In a further blow to the eurozone, a survey revealed that German investor confidence plummeted in June, sustaining its steepest fall in nearly 14 years, on increased concerns over the health of Spain's banking system.
Spain on Tuesday succeeded in raising 3.04 billion euros ($3.8 billion) in a short-term debt sale but its borrowing costs soared as the eurozone debt storm battered Madrid.
"The eurozone crisis is entering a dangerous and existential phase with the rise in Spanish bond yields pointing to the need for a (Spanish) bailout while in Greece, the political situation looks fragile and not strong enough to diminish the scenario of a Greek exit," said Neil MacKinnon, an analyst at VTB Capital financial group.
In late morning trade, London's FTSE 100 (Euronext: VFTSE.NX - news) index of leading companies climbed 0.83 percent to 5,536.64 points, after official data revealed a drop in British annual inflation.
Frankfurt's DAX 30 (Xetra: ^GDAXI - news) climbed 0.41 percent to 6,274.45 points and in Paris the CAC 40 (Paris: ^FCHI - news) eked out a gain of 0.08 percent to 3,067.56.
Madrid's IBEX 35 (Madrid: IBEX.MC - news) jumped 1.27 percent.
A financial source on Tuesday said that a detailed audit of Spain's stricken banks, which is to follow a first examination due by Thursday, had been delayed to September from late July.
It is the second of two audits ordered for the banks, many of them struggling with balance sheets heavily exposed to a property bubble that collapsed in 2008.
Spain's government won agreement on June 9 for its eurozone partners to extend a rescue loan of up to 100 billion euros to salvage the crisis-hit banks.
In foreign exchange deals meanwhile, the euro edged up to $1.2588 from $1.2571 late on Monday in New York (Frankfurt: A0DKRK - news) . The single currency had surged above $1.27 at the start of the week.
"The initial relief rally in the euro... which greeted the more favourable Greek election outcome is already losing momentum," said Lee Hardman, currency analyst at The Bank of Tokyo-Mitsubishi UFJ in London.
"It is clear that the market is becoming increasingly dissatisfied by developments within the eurozone which merely buy time rather than attempting to solve the underlying problems."
Sunday's elections put Greece's conservative New Democracy party in the lead, with enough seats to form a ruling coalition committed to austerity measures set out in the nation's 130-billion-euro ($165 billion) EU-IMF (Berlin: MXG1.BE - news) bailout.
Monday's euro rally faded also as traders' attention moved to deepening troubles in Spain, where the yields on benchmark 10-year bonds rocketed to a euro-era record above 7.2 percent.
Anything over 7.0 percent is considered unsustainable and is the point above which Ireland (Xetra: A0Q8L3 - news) , Portugal and Greece were forced into asking for a rescue package.
Madrid's woes come as it struggles to deal with a banking crisis as well as a miserable financial situation with soaring unemployment and a huge fiscal deficit.
Adding to the gloom, a report from Spain's central bank said bad debts in the country hit their highest level for 18 years in April, sparking concerns that the bailout for its banks might not be enough.
"Spain's funding issues have taken the limelight yet again. Not to see if they will need assistance but now by how much they will need in assistance," said Andrew Taylor, a market strategist at GFT trading group in Sydney.
"The figures of 100 billion euros seem to be well below audited estimates of 300 billion plus. That is a major mismatch in expectations come bailout agreement time," he said in a note to clients.
In Asia on Tuesday, Tokyo's stock market closed down 0.75 percent, Sydney shed 0.33 percent and Hong Kong ended flat.
Wall Street stocks finished mixed on Monday.
Why stocks may be even riskier than you think - Miami Herald
NEW YORK -- Job growth in the United States is slowing. Sales at stores have stopped growing. The economies of India, Brazil and China are cooling. Europe is crippled by government debt and bad bank loans.
But there's not much to worry about - at least if you ask the Wall Street analysts who give advice on which stocks to buy and sell.
This famously cheery group says earnings at the biggest U.S. companies, which appear at a standstill today, will start growing again this summer, then leap 15 percent in the last three months of 2012 from a year earlier.
To investors who believe these stock analysts - and who think that stocks are therefore a bargain - some veteran market watchers have a word of warning, or rather two: You're dreaming.
"Unless something miraculous happens, like all of a sudden Greece is wonderful, I don't see how we get 15 percent," says Christine Short, a senior manager at S&P Capital IQ, a research firm, referring to one of Europe's troubled countries.
Says Brian Lazorishak, portfolio manager at Chase Investment Counsel: "To get there you almost need an acceleration in economic growth. How and where does that come from?"
Don't ask the economists. They've been cutting estimates for economic growth, not raising them. The stock analysts don't appear to have noticed. For months, they've been telling investors to buy stocks because they're cheap.
The figure cited most often is the so-called forward price-earnings ratio, which is a company's stock price divided by the earnings per share expected over the next 12 months. A lower ratio suggests stocks are cheaper.
For companies in the Standard & Poor's 500, the ratio is 12.3 times, compared with a 35-year average of 12.9. That suggests stocks are reasonably priced. But if the earnings forecasts prove too high, stocks could look less appetizing, or even expensive.
It wouldn't be the first time analysts misled investors.
In June 2007, analyst estimates for the next 12 months had the S&P 500 trading at 16 times. By the end of the year, the economy was in recession, and the forecasts turned out too high. Analysts slashed them, but stocks were already dropping.
As it turned out, based on earnings that companies ended up generating, stocks had been trading in June at an expensive 22 times earnings per share.
Analysts are notorious for taking a long time cutting forecasts. In January, they predicted earnings for the April-June period would rise 4 percent from a year earlier, according to S&P Capital IQ. Now, they say earnings will fall 0.5 percent for that period.
The same pattern is playing out for the July-September quarter, too. Analysts think earnings will be up 4 percent, down from their estimate in January of more than 7 percent.
S&P's Short says she's impressed with how closely the analysts are holding to their 15 percent call for last three months of the year.
Part of the reason for the stubborn sunniness may be that analysts take their signals from the companies they cover, and Short says many companies have chosen to be vague about their prospects for later this year.
The few that have gotten specific have found investors in a less than forgiving mood.
On Wednesday, Scotts Miracle-Gro, a maker of lawn and garden products, cut its estimates for the year, and investors pushed its stock down 6.6 percent. On Friday, it was AAR Corp.'s turn to get slammed. The defense contractor said it might not earn as much as expected, and its stock plunged 7 percent.
Dimon defends JPMorgan's lobbying against some financial rules - Los Angeles Times
WASHINGTON -- JPMorgan Chase & Co. Chief Executive Jamie Dimon on Tuesday defiantly defended his lobbying against some new financial regulations as he faced tough questioning by lawmakers about the bank's huge trading loss.
Appearing before a congressional committee for the second time in less than a week, Dimon again said the bank was sorry for the more than $2-billion loss. But he downplayed the consequences for the company and the financial system, saying JPMorgan soon would report a solid profit for the second quarter of the year.
Dimon apologized that JPMorgan's trading loss was distracting Washington officials from fully focusing on the European debt crisis.
“I’m sorry I’ve taken up so many people's time with this loss because it is not significant in the global scheme of things,” Dimon told the House Financial Services Committee.
Dimon faced much tougher questioning than he did on Wednesday before the Senate Banking Committee, from both Democrats and Republicans. Rep. Barney Frank (D-Mass.) at one point told Dimon "please don't filibuster" when he didn't directly answer a question.
Frank asked Dimon if his compensation would be on the table for claw-backs by the company in light of the trading loss. Dimon said that was not up to him.
"My compensation is 100% up to my board," Dimon said.
Dimon defended JPMorgan's lobbying against parts of the Dodd-Frank financial reform law, including a provision that would mandate more disclosure of derivatives trading done by overseas units.
"Lobbying is a constitutional right and we have a right to have our voice heard," Dimon said.
"I’m not questioning your right to lobby," said Rep. Maxine Waters (D-Los Angeles). "I’m questioning what’s in the best interest of the American public."
Rep. Sean Duffy (R-Wis.) pressed Dimon on how regulators could oversee a huge bank like JPMorgan if they were unable to spot the bank's risky trading before the losses got so large.
"Are you too big to fail?" Duffy said, warning against future Wall Street bailouts.
"No, we're not too big to fail," Dimon said.
But Duffy pressed him on what would happen if the losses by JPMorgan, which has $2.3 trillion in assets, were higher. Asked if it was fair to say the bank could lose more than $500 billion or more at some point, Dimon said, "Not unless the Earth is hit by the moon."
Dimon submitted nearly exactly the same four-page written testimony to the House committee as he did to the Senate Banking Committee last week, which he read as his opening statement. He reiterated that the bank was embarrassed by the loss and that it "let a lot of people down and we are sorry for it."But he also said the loss should be put into perspective, saying no customer or taxpayer money was lost.
"When we make mistakes, we take them seriously and often are our own toughest critic," Dimon said. "In the normal course of business, we apply lessons learned to the entire firm. While we can never say we won't make mistakes -- in fact, we know we will -- we do believe this to be an isolated event."
Outside the Capitol Hill hearing room, about 30 members of National Nurses United, dressed in red and green Robin Hood outfits, pushed for a tax on Wall Street trades.
"Jamie Dimon, you're no good. People need a Robin Hood," they chanted in the hallway. They bill the tax of 50 cents per $100 traded as a Robin Hood Tax that would generate billions of dollars to help average Americans.
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US STOCKS-Wall St gains on hopes for central bank moves - Reuters UK
* Germany did not discuss EU bond-buying plan at G20
* FOMC begins two-day policy meeting
* Oracle climbs after results
* Dow up 0.9 pct, S&P up 1.1 pct, Nasdaq up 1.2 pct (Updates to late afternoon trade)
By Angela Moon
NEW YORK, June 19 (Reuters) - U.S. stocks rose on Tuesday on hopes that the Federal Reserve's policymakers will agree on extending stimulus measures as the economy struggles to recover.
A sharp decline in German business sentiment, alongside stubbornly high Spanish bond yields, raised expectations for market-friendly stimulus from European policymakers as well.
"We went to the highs of the day on that, and we have the Fed tomorrow. This is a bailout, central bank largesse bounce, and we'll see what follow-through (occurs) after the Fed tomorrow and whatever becomes of the ESM," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.
British media reports earlier had said German Chancellor Angela Merkel was poised to use Europe's dual bailout funds, known as the European Financial Stability Facility or the EFSF and the European Stability Mechinism or the ESM, to buy up the debt of countries like Italy and Spain and had discussed the plans at the summit. But a German government official told Reuters there was no discussion at a G20 summit in Mexico this week about using Europe's rescue funds to buy up the bonds of stricken members of the euro zone.
The Dow Jones industrial average was up 112.20 points, or 0.87 percent, at 12,854.02. The Standard & Poor's 500 Index was up 14.27 points, or 1.06 percent, at 1,359.05. The Nasdaq Composite Index was up 35.10 points, or 1.21 percent, at 2,930.43.
The S&P 500 has gained more than 7 percent from a five-month low hit earlier in June, and is on track to close above its 50-day moving average for the first time in seven weeks. But the sharp gains also leave the market vulnerable if the outcome of Wednesday's Fed meeting doesn't meet market expectations.
Growth-related stocks led the rally, with the S&P materials sector index up 2 percent and the financial sector index up 1.7 percent. U.S. Steel Corp jumped 7.6 percent to $19.80 and Bank of America added 4.6 percent to $8.12.
On Tuesday, the Federal Open Market Committee began the first day of a two-day meeting on interest-rate policy. The meeting got under way with expectations increasing that the U.S. central bank may extend its "Operation Twist" program, its effort to drive down long-term borrowing costs.
"People are anticipating some type of response from the Fed tomorrow and are buying or covering shorts in anticipation of that," said Paul Zemsky, head of asset allocation at ING Investment Management in New York. "There's a risk the market gets disappointed."
Spain's government bond yields eased slightly after it raised 3 billion euros at a short-term debt sale, with the higher yields enticing investors. However, with its 10-year bond yield above 7 percent, investors worried over how long the euro zone's fourth-largest economy can survive without foreign help.
In Greece, parties promised to form a coalition government soon and seek concessions from the country's EU and IMF lenders on an austerity program that is both keeping the country away from bankruptcy and mired in a very long recession.
Oracle Corp rose 3.3 percent to $28.01 a day after it reported stronger-than-expected quarterly profit, releasing the results three days ahead of schedule after news of the pending departure of a senior sales executive fueled concerns that business was stagnating.
Walgreen Co tumbled 5.6 percent to $30.17 after the pharmacy chain reported quarterly earnings and said it would buy a 45 percent stake in Alliance Boots for $6.7 billion in a cash-and-stock deal.
FedEx Corp rose 3 percent to $91.17 after the package delivery company reported fourth-quarter earnings and provided an outlook for the first quarter and 2013.
Shares of J.C. Penney dropped 8.3 percent to $22.30 a day after its president abruptly left the department store operator following a botched advertising campaign.
Economic data showed U.S. housing starts fell in May from a 3-1/2 year high, but permits to build new homes rose sharply, suggesting the housing recovery remains on track. (Reporting By Angela Moon; Additional reporting by Edward Krudy; Editing by Jan Paschal)
Stocks close higher on hopes for new Fed action - Los Angeles Times
The Dow Jones industrial average soared 95.51 points to 12,837.33, its highest close in a month. Microsoft was one of the biggest gainers in the Dow. The stock jumped 3 percent after the company announced a new tablet computer called Surface to compete with the immensely popular iPad from Apple. Microsoft was up 86 cents at $30.70.
Stock traders are also latching on to recent signals from the Federal Reserve that the central bank may reveal plans to stimulate the economy at the end of its two-day meeting Wednesday.
“A good portion of today's strong market action is from a hope factor that we're going to get more easing from the Fed,” said Peter Cardillo, chief market economist at Rockwell Global Capital.
Economists say that even if the Fed does not act after its meeting, it will send a clear message that it is standing by to do so if needed.
Financial companies were among the best performing stocks as investors hoped for Fed action: Bank of America soared 4.5 percent, Citigroup gained 3.5 percent, JPMorgan Chase was up 2.2 percent and Morgan Stanley rose 3 percent.
Bank investors were also pleased to learn that a federal housing agency will clarify the process under which home lenders are forced to buy back soured home loans. The buybacks have cost banks billions of dollars. The uncertainty surrounding how much loans they will have to repurchase from the government has led them to reduce lending.
The agency's statement comes just as the housing market is showing signs of healing. American builders broke new ground on more single-family homes in May and requested more permits to build homes and apartments than they have in the past three and a half years.
The Commerce Department also said April was much better for housing starts than first thought. The government revised the figures up to 744,000, the fastest building pace since October 2008.
Material stocks rose on the prospect of demand from home construction. US Steel rose over 9 percent and Freeport-McMoran Copper rose over 3 percent.
In other trading, the Standard & Poor's 500 index rose 13.20 points to 1,357.98. Seven of the 10 industry groups in the S&P rose. The technology-heavy Nasdaq composite index rose 34.43 points to 2,929.76. The Dow Jones Utility average touched the highest level since August 2008 before closing slightly lower.
In Europe, borrowing costs eased for Spain: its benchmark 10-year bond yield fell below the key 7 percent level to 6.99 percent.
Spain raised $4.28 billion in an auction of 12- and 18-month bills, more than analysts had expected. However Spain's cost to raise the money skyrocketed. The Spanish government had to pay an interest rate of 5.07 percent for the 12-month bills, up sharply from 2.98 percent at the last such auction on May 14.
Still, investors were heartened to see that people were willing to lend Spain money.
“Even though it cost Spain dearly and yields rose to a record, the fact is that it was not shut out of the markets,” said Cardillo.
Major European stock markets rose: Spain's IBEX 35 index rose 2.7 percent. Germany's DAX added 1.8 percent and France's CAC-40 rose 1.7 percent.
The dollar and Treasury prices fell as traders moved money out of low-risk assets. The dollar fell about a penny against the euro to $1.27 and the yield on the 10-year Treasury note rose to 1.62 percent from 1.58 percent late Monday.
Among other stocks making big moves:
— Oracle soared 84 cents, or about 3 percent, to $27.96 after the software maker surprised investors with the early release of its fourth-quarter earnings. The results beat Wall Street's forecasts, and the company said new software licenses increased sharply.
— J.C. Penney plunged $2.08, or 8.5 percent, to $22.25 after the chain store announced that Michael Francis, the former Target executive brought in to help redefine the company's brand, was leaving the company. It was the biggest loss of any stock in the S&P 500.
— Barnes & Noble fell 61 cents, or 4 percent, to $14.63 after the book store chain reported a wider loss than Wall Street was expecting. It also reported that its Nook e-reader sales fell 11 percent in the quarter.
— Walgreen plunged $1.87, or 5.85 percent, to $30.09 after the company said it is buying a $6.7 billion stake in European health and beauty retailer Alliance Boots. Investors worried about a deal that would expose the biggest U.S. drugstore chain to a continent beset by worries of a recession.
G20 to endorse growth plan and urge more financial integration in Europe - The Guardian
Leaders of the G20 economies are preparing to endorse a communique pledging further action on growth, increased resources for the International Monetary Fund and fresh commitments by the European Union to do more to integrate to solve its problems.
The G20 leaders representing 80% of the world economy are meeting in the luxury resort of Los Cabos, Mexico, against a backdrop of incessant economic storms, mainly coming from the eurozone.
Plans for an after-dinner meeting between the US president, Barack Obama, and the leading four eurozone countries attending the G20 were scrapped officially because the issue of the eurozone had been discussed enough.
There may also have been fears that tensions were starting to escalate between eurozone leaders, notably the two EU figureheads, José Manuel Barroso and Herman Van Rompuy, and other G20 countries about the slowness with which the EU was addressing its problems.
In a sign of the tensions, the Italian prime minister, Mario Monti, said no one thought the EU was "the only source of the problem". The crisis "had its origins in imbalances in other countries, including the US", he said.
Among the commitments in a draft G20 communique, which emerged on Tuesday, was a pledge to consider concrete steps towards a "more integrated financial architecture" in Europe that would include common banking supervision and firm guarantees to repay bank depositors.
The G20 communique states that euro-area members of the G20 "will take all necessary policy measures to safeguard the integrity and stability of the area, improve financial markets and break the feedback loop between sovereigns and banks".
The US, the IMF and European commission have been urging EU member states to press ahead with a banking union.
The term banking union does not appear in the text, but the wording suggests Germany may be willing to shift a little in further talks due to be held between EU leaders both in Rome on Friday and then at a full gathering of EU heads of state in Brussels next week.
In the most substantive development, the emerging countries agreed to increase funding for the IMF in a move that will see changes in the composition in the board of the IMF in return.
China, Brazil, Mexico, India and Russia all announced contributions to the IMF to bolster a "second line of defence". China will contribute $43bn (£27.4bn), the official Xinhua news agency reported. The others' share was $10bn each.
In total, the IMF's crisis intervention fund has been increased to $456bn.
Britain is not making any further contributions after already increasing its funding in the spring.
There were fears though that the resources would still not be enough to deal with the crisis.
"There is concern that the firewall available may not be adequate to deal with contagion," the Indian prime minister, Manmohan Singh, said at the summit. "The resources currently expected to be mobilised by Europe and the IMF are less than was estimated a year ago, and the crisis is actually more serious."
He added: "Financial markets normally favour austerity, but even they are beginning to recognise that austerity with no growth will not produce a return to a sustainable debt position."
In a message to Germany, he added: "Austerity in the debt-ridden members of the eurozone can work only if surplus members are willing to expand to offset contraction elsewhere in the currency area."
Conflicting messages were coming from Germany as to whether it was willing to delay Greece's current bailout plan.
The German chancellor, Angela Merkel, took a tough line, saying there could be no backsliding in the previously negotiated timetable, but other German leaders sounded a more flexible note.
Greece must achieve a budget surplus, excluding debt-service costs, of around 4.5% of gross domestic product from 2014 onwards, compared with a deficit of 5% in 2011. Athens is expected to ask to be given until 2016 to achieve the target. A slower timetable would add to borrowing needs in the meantime.
Obama met Merkel on the fringes of the summit to press her to do more. With the US election only five months away, he is desperate to see the gloom lift from world markets.
"The president was encouraged by what he heard regarding ongoing discussions in Europe about the paths they are pursuing to address the crisis," the White House spokesman Jay Carney said.
David Cameron, the British prime minister, is due to lead a G20 discussion on trade on Tuesday, warning of the dangers of protectionism, and arguing that ending trade barriers may be one of the best ways to boost growth at a time when governments cannot afford to boost spending.
The Russian president, Vladimir Putin, showed a determination to go in the opposite direction, saying: "It is time to stop pretending and come to an honest agreement on the acceptable level of protectionist measures that governments can take to protect jobs in times of global crisis," he said.
"This is particularly important for Russia as our country will join the WTO this year and we intend to take an active part in the discussions on the future rules for global trade."
Stocks rise on hope for Fed action - Click2Houston.com
U.S. stocks finished up about 1% Tuesday, as investors breathed a delayed sigh of relief about Greece and were optimistic the Federal Reserve might act to boost the economy at the end of its two-day meeting .
"When bad news isn't as bad as you expected, the market reflects that," said Bruce McCain, chief investment strategist at Key Private Bank.
The Dow Jones industrial average rose 96 points, or 0.8%, the S&P 500 gained 13 points, or 1%, and the Nasdaq added 34 points, or 1.2%.
Sunday's election in Greece yielded a victory for the pro-bailout party and eased fears about the country exiting the euro. Investors are hopeful that Greek leaders will be able to form a coalition government, with the National Bank of Greece up 11% and Global X FTSE Greece 20 ETF up 6% at the close of European markets.
Financial shares were some of the biggest gainers Tuesday. "Bank stocks have been among the most sensitive to the overall trends," said McCain. "Clearly money is moving back toward the risk sector."
Shares of JPMorgan Chase, Bank of America, Goldman Sachs, Morgan Stanley and Citigroup were up between 2% and 5%.
Investors are also optimistic that the Federal Reserve's two-day meeting, which ends Wednesday, will produce another round of bond buying, plans to continue its so-called Operation Twist, or some other type of stimulus.
"What we're seeing today foretells the way the rest of the week is going to go," said Doug Cote, chief market strategist at ING Investment Management. "Since we're expecting to see supportive policy out of the U.S. and maybe even out of Europe, the market will get even better."
Stocks saw a similar rise after the last Fed policy meeting in April, with the Dow rising about 350 points in the week after the April 24 meeting. But the boost didn't last; the Dow erased most of its gains by May 7, falling back 270 points.
As fears of an imminent Greek exit from the euro recede, banking and debt worries in Spain have moved into greater focus. Spain's 10-year yield remained above 7% Tuesday, heightening worries that the country will need a bailout
Leaders of the Group of 20 nations were concluding a meeting in Mexico on Tuesday. Europe is at the top of the agenda, though analysts aren't expecting any significant policy announcements.
U.S. stocks ended mixed Monday after a day of choppy trading following the election in Greece. But CNNMoney's Fear & Greed index showed investors' level of fear continued to lessen.
Economy: In May, home builders filed for building permits at the fastest pace since September 2008, the government reported Tuesday.
Permits came in at a seasonally adjusted annual rate of 780,000, easily topping forecasts of 725,000 from economists surveyed by Briefing.com.
Housing starts, which are more affected by weather than permits, fell slightly to an annual rate of 708,000, a bit short of forecasts.
Companies: Shares of retailer JC Penney tumbled after the company announced late Monday that its president had left. Michael Francis was hired away from rival Target in October to lead Penney's marketing efforts, but in May the company announced disappointing sales that sent its share price sharply lower.
Business software maker Oracle made a surprise earnings announcement after the close Monday, announcing an operating profit of 82 cents a share and a $10 billion buyback. Shares finished the day up 3% on Tuesday.
Drugstore chain Walgreens announced Tuesday it was buying a 45% equity ownership stake in Alliance Boots, the Switzerland-based drug wholesaler that is a major global drugstore chain. Shares closed down 5% on the news.
JPMorgan Chase CEO Jamie Dimon returned to Capitol Hill Tuesday to testify before the House Financial Services Committee about the bank's $2 billion trading loss. Dimon and regulators debated how institutions like JPMorgan should be monitored.
Dimon assured regulators that the bank "can be regulated" and that it is "not too big to fail."
FedEx reported earnings of $1.99 a share in its fiscal fourth quarter, excluding special items, topping forecasts. But its guidance for fiscal first-quarter earnings was below forecasts. Shares were up 3% in as markets closed.
Financial services firm Jefferies reported earnings of 31 cents a share, excluding special items, down from 36 cents a year earlier but topping forecasts.
Book retailer Barnes & Noble reported a quarterly loss of $1.08 a share, wider than the loss of $1.04 a share a year earlier.
Microsoft shares edged higher after the software maker unveiled a Windows tablet computer of its own design late Monday.
Shares of Pandora fell Tuesday after Spotify announced it was launching a free mobile radio app for Apple's iPhone, iPad and iPod touch.
'Single biggest risk to world economy': World focuses on Europe as G20 leaders urge more action on financial crisis - Daily Mail
- But President of European Commission says crisis originated in U.S.
- David Cameron among leaders pressuring Germany to take decisive action towards fiscal union
- IMF to pump further $456bn (290bn) into euro crisis war chest
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World leaders at the G20 summit have focused their attention on Europe, as efforts continue to resolve the financial crisis branded 'the single biggest risk for the world economy'.
David Cameron was among those pushing for 'core' eurozone states like Germany to take decisive steps towards the fiscal and banking union which will help the euro function properly.
The Prime Minister's calls came after the financial crisis sweeping Europe was described as 'the single biggest risk for the world economy'.
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David Cameron was among the world leaders at the G20 summit pushing for 'core' Euro states like Germany to find fiscal and banking union to help stabilise the eurozone
However, the President of the European Commission attacked critics of the of the eurozone's crisis management, declaring that the crisis originated in the U.S.
After facing fresh calls for Europe to find a resolution, Jose Manuel Barroso claimed 'the crisis originated in North America' with the collapse of real-estate-linked financial products.
At the G20 summit in Mexico today, David Cameron and other world leaders called on political parties in Greece to get on and form a coalition government, following Sunday’s elections, warning any delay could be ‘very dangerous’.
Spain, meanwhile, is likely to pay record prices to borrow at debt auctions today and on Thursday, after the Greek election failed to ease concerns about the future of the euro zone
The yield on Spanish 10-year bonds hit a fresh high of above seven per cent yesterday, as initial relief over the victory of pro-bailout parties in Greece gave way to ongoing fears of deeper problems facing the bloc.
Seven percent is considered too pricey for a country to afford over the long term. Such levels have previously led to bailouts in Greece, Ireland and Portugal.
United front: G20 leaders, including Barack Obama on the front row and David Cameron and Angerla Merkel in the central row, have had their discussions dominated by the euro crisis
Jose Angel Gurria, secretary general of the Organisation for Economic Co-operation Development, branded the euro crisis 'the single biggest risk to the world economy'
Among the 17-country group that uses the euro, there still appears to be little concrete agreement over how best to solve the problems of too much government debt holding back the region's recovery.
A narrow victory for the New Democracy party in elections over the weekend in Greece means that the country is more likely to stick to the harsh austerity terms of its 240bn euro ($300bn) bailout package and avoid a chaotic exit from the euro in the very near future - an event many fear would destabilize Europe and send shockwaves through the world.
European Commission President Jose Manuel Barroso defended the eurozone, insisting 'the challenges are not only European, they are global'
Spain, the euro zone's fourth-largest economy and more than twice the size of bailed-out euro zone partners Greece, Portugal and Ireland combined, is at the centre of market jitters as it struggles with a deep recession and banking sector restructure.
Despite the financial instability, European Commission President Jose Manuel Barroso defended the eurozone, insisting 'the challenges are not only European, they are global'.
He also took what was seen as a subtle dig at China and other non-democratic countries at the summit in Mexico.
'Not all the members of the G20 are democracies but we are democracies and we take decisions democratically.
'Sometimes this means taking more time,' he said.
'Frankly we are not coming here to receive lessons in terms of democracy or in terms of how to handle the economy, because the European Union has a model that we may be very proud of.'
He was speaking as the IMF announced a further $456bn (290bn) for its euro crisis war chest - on top of the $430bn (274bn) announced in April.
Tackling the euro crisis has so far dominated the G20's talks in Los Cabos.
Despite the victory of a pro-euro party in Greece's elections at the weekend, there has not yet been an announcement on the formation of a government in Athens.
Jose Angel Gurria, the head of the Organisation for Economic Co-operation and Development (OECD), had earlier said the crisis was 'the single biggest risk for the world economy'.
Prime Minister David Cameron urged Greece's centre-right New Democracy party to move 'decisively and swiftly' to form a new administration, warning that 'delay could be deadly'.
But he acknowledged that the crisis in the eurozone could rumble on 'for some time' and made clear that he is looking elsewhere in the world for trading partners to replace lost demand from the UK's traditional export markets in Europe.
Video: EC President blames the U.S. and Cameron slams the French tax plan
Video: Cameron calls for EU recovery plan at G20
Stocks jump nearly 100 points on hopes of Fed action - The Christian Science Monitor
Stocks rose sharply on Wall Street Tuesday as traders turned their focus back to corporate news from the US and hopes that the Federal Reserve will come up with a plan to jumpstart the economy. Banks and materials stocks led the market higher.
Skip to next paragraphThe Dow Jones industrial average soared 95.51 points to 12,837.33, its highest close in a month. Microsoft was one of the biggest gainers in the Dow. The stock jumped 3 percent after the company announced a new tablet computer called Surface to compete with the immensely popular iPad from Apple. Microsoft was up 86 cents at $30.70.
Stock traders are also latching on to recent signals from the Federal Reserve that the central bank may reveal plans to stimulate the economy at the end of its two-day meeting Wednesday.
"A good portion of today's strong market action is from a hope factor that we're going to get more easing from the Fed," said Peter Cardillo, chief market economist at Rockwell Global Capital.
Economists say that even if the Fed does not act after its meeting, it will send a clear message that it is standing by to do so if needed.
Financial companies were among the best performing stocks as investors hoped for Fed action: Bank of America soared 4.5 percent, Citigroup gained 3.5 percent, JPMorgan Chase was up 2.2 percent and Morgan Stanley rose 3 percent.
Bank investors were also pleased to learn that a federal housing agency will clarify the process under which home lenders are forced to buy back soured home loans. The buybacks have cost banks billions of dollars. The uncertainty surrounding how much loans they will have to repurchase from the government has led them to reduce lending.
The agency's statement comes just as the housing market is showing signs of healing. American builders broke new ground on more single-family homes in May and requested more permits to build homes and apartments than they have in the past three and a half years.
The Commerce Department also said April was much better for housing starts than first thought. The government revised the figures up to 744,000, the fastest building pace since October 2008.
Material stocks rose on the prospect of demand from home construction. US Steel rose over 9 percent and Freeport-McMoran Copper rose over 3 percent.
In other trading, the Standard & Poor's 500 index rose 13.20 points to 1,357.98. Seven of the 10 industry groups in the S&P rose. The technology-heavy Nasdaq composite index rose 34.43 points to 2,929.76. The Dow Jones Utility average touched the highest level since August 2008 before closing slightly lower.
In Europe, borrowing costs eased for Spain: its benchmark 10-year bond yield fell below the key 7 percent level to 6.99 percent.
Spain raised $4.28 billion in an auction of 12- and 18-month bills, more than analysts had expected. However Spain's cost to raise the money skyrocketed. The Spanish government had to pay an interest rate of 5.07 percent for the 12-month bills, up sharply from 2.98 percent at the last such auction on May 14.
Still, investors were heartened to see that people were willing to lend Spain money.
"Even though it cost Spain dearly and yields rose to a record, the fact is that it was not shut out of the markets," said Cardillo.
Major European stock markets rose: Spain's IBEX 35 index rose 2.7 percent. Germany's DAX added 1.8 percent and France's CAC-40 rose 1.7 percent.
The dollar and Treasury prices fell as traders moved money out of low-risk assets. The dollar fell about a penny against the euro to $1.27 and the yield on the 10-year Treasury note rose to 1.62 percent from 1.58 percent late Monday.
Among other stocks making big moves:
— Oracle soared 84 cents, or about 3 percent, to $27.96 after the software maker surprised investors with the early release of its fourth-quarter earnings. The results beat Wall Street's forecasts, and the company said new software licenses increased sharply.
— J.C. Penney plunged $2.08, or 8.5 percent, to $22.25 after the chain store announced that Michael Francis, the former Target executive brought in to help redefine the company's brand, was leaving the company. It was the biggest loss of any stock in the S&P 500.
— Barnes & Noble fell 61 cents, or 4 percent, to $14.63 after the book store chain reported a wider loss than Wall Street was expecting. It also reported that its Nook e-reader sales fell 11 percent in the quarter.
— Walgreen plunged $1.87, or 5.85 percent, to $30.09 after the company said it is buying a $6.7 billion stake in European health and beauty retailer Alliance Boots. Investors worried about a deal that would expose the biggest U.S. drugstore chain to a continent beset by worries of a recession.
To those who keep worrying about money, get real. The Euro Crisis is not about money, it is about DEBT. In DEBT terms, the Euro is nothing more than a piece of paper, an IOU, a promissary note - meaning a
- mistertoyou, New York, New York, 19/6/2012 22:19
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