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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 downgraded the long-term ratings of 18 Spanish banks.
The Dow Jones Industrial Average ($INDU) was up 116 points at 12,527. S&P 500 ($INX) shares were up 11 points at 1,320, and the Nasdaq ($COMPX) was up 25 points at 2,835.
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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U.S. stocks were poised to follow European stocks higher, a day after markets sold off on worries about the debt and banking crisis in Europe.
Dow Jones industrial average, S&P 500 and Nasdaq futures were all slightly higher. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.
Trading could be choppy, with little U.S. economic or company news on tap. Investors will continue to monitor uncertainty in Europe, and Spain's request for up to €100 billion ($125 billion) in assistance from the European Union its banking system.
As the situation in Spain heats up, bond yields have risen again to about 6.7%. Italian bond yields also rose Tuesday, remaining above the 6% benchmark -- a warning sign that the country could need a bailout of its own.
Meanwhile in Greece, elections this Sunday are seen as a pivotal moment that could determine if the country remains a member of the euro currency union.
Art Hogan, managing director at Lazard Capital Markets, said he's concerned that it will be as difficult to maintain the early positive momentum for stocks as it was Monday. U.S. stocks closed the day with all three indexes down more than 1%, as higher futures could not be carried over into the trading day.
"You see a modest updraft in the European markets and we seem to be enthusiastic about that," Hogan said. "I think we're in the environment where the risk is more to the downside, especially on days where there is no catalyst."
World markets: European stocks rose in midday trading. Britain's FTSE 100 ticked up 0.3%, while the DAX in Germany added 0.4% and France's CAC 40 edged 0.1% higher. All the indexes were down slightly from earlier highs.
Asian markets closed lower Tuesday, after a rise the previous day on stronger economic readings out of China. The Shanghai Composite fell 0.7%, while the Hang Seng in Hong Kong slid 0.4% and Japan's Nikkei ended 1% in the red.
Economy: Before the open, the Bureau of Labor Statistics will release import and export price data for May.
At 2 p.m. ET, the Treasury Department will release its monthly budget report. Investors will look for a repeat of last month, when the Treasury revealed a $59 billion surplus, the first monthly budget surplus since September 2008.
Companies: Shares of Michael Kors shot up 13.9% in premarket trading. The fashion retailer reported fiscal fourth-quarter sales that more than doubled from year-earlier results, easily topping forecasts as well as the company's earlier guidance. The company also gave first-quarter earnings guidance above current forecasts.
Juniper Networks shares rose 1.8% in heavy premarket trading, after the company announced a $1 billion share repurchase plan late Monday.
Bank stocks were among the biggest losers Monday, but Bank of America and Citigroup were both up 0.8% in premarket trading, while JPMorgan Chase was up 0.2%.
Apple shares were 1.6% lower on the day of its developer's conference, as its announcement of the new MacBook Air and other products wasn't enough to pull it from a recent slump. Shares were up 0.5% in premarket trading early Tuesday.
Currencies and commodities: The dollar lost ground against the euro and the British pound, but rose slightly versus the Japanese yen.
Oil for July delivery continued to slide, losing 38 cents to $82.33 a barrel.
Gold futures for August delivery fell $5.40 to $1,591.40 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury fell, taking the yield up to 1.63% from 1.60% late Monday.
Stocks Claw Back, but Spanish Worries Linger - CNBC
Stocks recovered Tuesday after briefly turning flat following news that Fitch downgraded the long-term ratings on 18 Spanish banks.
The Spanish 10-year bond yield hit its euro-era high at 6.807 percent. Fitch's bank downgrades come after the agency lowered Spain's sovereign credit rating last week to "BBB."
The Dow Jones Industrial Average climbed more than 100 points, after snapping a four-day winning streak in the previous session. United Tech [UTX Loading... () 
]led the laggards, while Boeing [BA Loading... () ] rallied after Bernstein boosted its rating on the company to "outperform" and raised its price target to $92 from $85.
The S&P 500 and the Nasdaq also turned positive. The CBOE Volatility Index, widely considered the best gauge of fear in the market, slipped near 23.
Most S&P sectors turned higher, led by energy and materials.
Stocks added to losses throughout the session Monday to finish down more than 1 percent across the board as initial euphoria over Spain's bank bailout over the weekend fizzled and amid ongoing fears over a global economic slowdown.
“It’s surprising how quickly the market looks forward – we’re still held by the European issues and that’s all the U.S. market seems to care about,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research. “We’re just waiting for events to happen almost as quickly as they happen.”
Still, Detrick said he remains bullish based on the negative sentiment among traders and investors.
“The fact that we didn’t break below 1,298 [on the S&P 500]…it seems like we’re trying to carve out a pretty substantial bottom,” he said. “The potential for a second-half surprise rally in the face of negative news is real.”
European shares recovered to close higher in choppy trade as investors shrugged off the Fitch downgrade. But sentiment remained cautious ahead of Greece's election on June 17, seen as a referendum on the debt-ridden nation's future in the euro zone.
On the economic front, import prices recorded their biggest decline in almost two years as energy and food costs fell 1.0 percent in May, according to the Labor Department. Meanwhile, export prices slipped 0.4 percent, the first drop since December. Economists had expected a decline of 0.1 percent.
Facebook [FB Loading... () ] edged higher, trading just above $27 a share. Still, the stock is down more than 25 percent from its market debut price of $38 a share. Meanwhile, Needham reiterated its "buy" rating on the social-networking giant.
Among earnings, Michael Kors [KORS Loading... () ] soared after the designer clothing and handbag maker beat profit expectations and handed in a full-year earnings and revenue forecast that exceeded estimates.
Texas Instruments [TXN Loading... () ] was flat after the chipmaker narrowed its second-quarter forecast, saying it expects earnings per share to now fall between 32 cents to 36 cents, from a previous estimate of 30 cents to 38 cents. It projects revenue to fall between $3.28 billion to $3.42 billion, versus a previous estimate of between $3.22 billion to $3.48 billion. Meanwhile, at least three brokerages cut their price target on the firm.
Juniper Networks [JNPR Loading... () ] climbed after the data network equipment maker announced a stock buyback of up to $1 billion.
Apple [AAPL Loading... () ] edged higher after Canaccord Genuity raised its price target on the tech giant to $800 from $775. The upgrade comes a day after Apple's annual Worldwide Developers Conference largely failed to impress investors, even after the company unveiled its next-generation MacBook Air and MacBook Pro laptops in addition to a new version of its mobile operating system, iOS 6. (Read More: Apple Stock at $1,000? Analysts Say Within Two Years)
The government is expected to auction $32 billion in 3-year notes, with the results available shortly after 1 pm ET.
And the Treasury’s monthly budget for May is expected at 2pm ET. Economists polled by Briefing.com forecast a $125 billion deficit, against a $57.6 billion deficit in April.
At 11:30 am ET, Fed Governor Daniel Tarullo will give a speech at the Federal Reserve Bank of San Francisco about shadow banking.
The National Federation of Independent Business Small Business Optimism Index for May showed a slight decline amid the political and economic uncertainty.
—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
TUESDAY: Fed Gov. Tarullo speaks, 3-yr note auction, GM shareholders mtg
WEDNESDAY: Weekly mortgage apps, PPI, retail sales, business inventories, oil inventories, 10-yr note auction, OPEC mtg, Caterpillar shareholders mtg, Dimon testifies before Senate
THURSDAY: CPI, jobless claims, current account, 30-yr bond auction, AOL shareholders mtg; Earnings from Kroger, Smithfield Foods, Pier 1 Imports
FRIDAY: Empire state mfg survey, treasury int'l capital, industrial production, consumer sentiment, credit card default rates reported, quadruple witching
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US STOCKS SNAPSHOT - Wall St pares early gains - Reuters
Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.
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