U.S. Stocks Surge, Led by Industrial Shares, After European Accord
DJ Realtime News Equity 10:56 AM ET 06/29/2012
--U.S. stocks rally after Europe agreement for bank aid
--Gains follow similar advances overseas
--Consumer-sentiment reading misses expectations
By Matt Jarzemsky
NEW YORK--Industrial and energy shares led a broad-based rally in U.S. stocks as European leaders' agreement to aid struggling banks eased fears about the region's debt crisis.
The Dow Jones Industrial Average jumped 213 points, or 1.7%, to 12816 in mid- morning trade, putting it on track for its biggest advance in three weeks. The gains came on the final day of a solidly down quarter for U.S. stocks, largely due to a steep decline in May.
The Standard & Poor's 500 advanced 25 points, or 1.9% to 1354. Industrials, technology and energy, sectors seen as exposed to global growth, led the advance. Constellation Brands surged 22%, the biggest climb in the index, after agreeing to buy out the rest of a joint venture that imports and markets Grupo Modelo beer brands such as Corona Extra, the best-selling imported beer in the U.S.
The Nasdaq Composite rose 52 points, or 1.8%, to 2901.
"It's a reminder of how little people expect coming out of any of these summits," said Andres Garcia-Amaya, global market strategist at J.P. Morgan Funds.
"This begins the roadmap to creating a pan-European banking union by year end, " Mr. Garcia-Amaya said. "It gets you closer to that integration that you want to see within Europe. so that's big, but it's just words for now. We need to see the details."
European leaders at a two-day summit in Brussels said they would speed plans to create a single supervisor for the euro zone's banks. They agreed that the euro zone's bailout funds should be able to directly boost the capital of struggling banks, without adding to government debt.
European shares soared as Spanish and Italian government bond yields fell. The Stoxx 600 Europe index advanced 2.7%, while Spain's IBEX 35 index gained 4.7%.
Asian stocks also bolted higher at the sight of the summit headlines with the Hang Seng adding 2.2%, while the Nikkei tacked on 1.5%.
The Europe-inspired gains were set to cap the first down quarter in three for U.S. stocks. As of the latest close, the Dow Jones Industrial Average was off 4.6% this quarter, while the S&P 500 had retreated 5.6%.
Consumer spending was unchanged in May, failing to increase for the first time in six months, even as income ticked up 0.2%. The readings matched economists' expectations, according to a Dow Jones Newswires poll. April's spending data were revised lower.
The core price index for personal consumption expenditures, which excludes volatile food and energy prices, edged up 0.1% from a month earlier in May. Economists had forecast a 0.2% advance. The Institute for Supply Management- Chicago's business barometer, a survey of Chicago-area purchasing managers, unexpectedly ticked up to 52.9 from 52.7.
The University of Michigan's June consumer-sentiment gauge came in at 73.2 versus 79.3 in May, missing expectations for a reading of 74.3.
In the corporate arena, Research in Motion's shares plunged 19% after the Blackberry maker announced its first quarterly operating loss in more than seven years. The company also said it plans to cut about 5,000 jobs-about one-third of its workforce-by the end of the fiscal year.
Nike slumped 10% sfter the athletic-apparel maker reported worse-than-expected quarterly results and warned of slower growth in China.
Ford Motor slipped 4.6% after warning it expects to lose roughly $570 million in its overseas operations in the second quarter, largely because of Europe's slumping economy. The auto maker expects overall second-quarter profit to decline from the year-earlier period.
ServiceNow (NOW), a provider of cloud computing services for businesses, rose 29% after its initial public offering on the New York Stock Exchange priced higher than expected.
(END) Dow Jones Newswires
06-29-12 1056ET