Wall Street up on Greece Hopes; Nasdaq Hits Record

Markets Reuters

U.S. stocks ended higher on Monday, with the Nasdaq closing at a record as hopes grew that a deal would be reached to prevent Greece from defaulting on loans.

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Equities have been largely driven by the situation in Greece of late, with investors concerned that if the country defaults on its loans, it may have to leave the euro or the European Union, potentially shaking the region's economic foundations.

Athens presented new reform proposals which were cautiously welcomed by euro zone finance on Monday, though the Eurogroup said the proposals required detailed study and that it would take several days to determine whether they can lead to an agreement. Greece needs fresh funds to avoid defaulting on a $1.8 billion debt repayment to the International Monetary Fund on June 30.

"This takes one anxiety off the table, even if it doesn't yet resolve the primary issues that made investors anxious in the first place," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio.

Sentiment was also lifted by merger and acquisition activity. The S&P energy index <.SPNY> rose 1 percent as the top-performing sector of the day after Energy Transfer Equity LP <ETE.N> confirmed it had made a $48 billion unsolicited bid for Williams Companies Inc <WMB.N>, hours after Williams rejected the offer as significantly too low.

Shares of Williams surged 26 percent to $60.90 and were the biggest percentage gainer on the S&P 500 by far.

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Separately, Cigna Corp <CI.N> rose 4.8 percent to $162.65 after the health insurer rebuffed Anthem's <ANTM.N> $47 billion merger proposal on Sunday. Anthem rose 3.6 percent to $171.04.

Homebuilders rose as existing home sales grew more than expected in May, surging to their highest in five- and-a-half years. The PHLX Housing index <.HGX> rose 0.9 percent while Lennar Corp <LEN.N> added 1.7 percent to $49.49.

Martha Stewart Living Omnimedia <MSO.N> slumped 12.5 percent to $6.11 on heavy volume after Sequential Brands <SQBG.O> agreed to buy the company in a deal that values it at about $353 million, or $6.15 a share. Martha Stewart shares had risen about 37 percent over two days after news of the deal emerged.

The Dow Jones industrial average <.DJI> rose 104.53 points, or 0.58 percent, to 18,120.48, the S&P 500 <.SPX> gained 13 points, or 0.62 percent, to 2,122.99 and the Nasdaq Composite <.IXIC> added 36.97 points, or 0.72 percent, to 5,153.97.

With the day's gains, the Nasdaq ended at a record while the S&P closed 0.3 percent away from its own record close. Currently, the S&P trades at 17.3 times earnings, according to Thomson Reuters data, above its long-term average.

"Valuations are somewhat high, but there aren't many alternatives that look attractive," said McCain. "Stocks will probably get a lot higher before there's any serious risk of a pullback on valuation."

Advancing issues outnumbered declining ones on the NYSE by 1,830 to 1,238, for a 1.48-to-1 ratio on the upside; on the Nasdaq, 1,819 issues rose and 988 fell for a 1.84-to-1 ratio favoring advancers.

The benchmark S&P 500 index was posting 51 new 52-week highs and 1 new lows; the Nasdaq Composite was recording 207 new highs and 26 new lows.

About 5.31 billion shares traded on all U.S. platforms, according to BATS exchange data, compared with the month-to-date average of 6.17 billion.

(By Ryan Vlastelica; Editing by Christian Plumb)