FOX Business: The Power to Prosper
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U.S. equities made a broad move higher on Wednesday, the first trading day of the second half of the year, and the second-straight day of gains. Investors digested developments out of Greece, and a flurry of economic data ahead of Thursday's June jobs report.
The Dow Jones Industrial Average rose 138 points, or 0.79% to 17757. The S&P 500 gained 14 points, or 0.69% to 2077, while the Nasdaq added 26 points, or 0.53% to 5013.
Financials led nine of ten S&P 500 sectors to end the session in the green. Energy was the laggard, declining 1.3% for the day.
Wall Street was propelled higher Wednesday on hopes Greece will soon come to an agreement with its international creditors. However, the broader averages stepped back from session highs after comments from Greek Prime Minister Alexis Tsipras who, in a press conference, said the nation will move ahead with its scheduled referendum on Sunday.
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Tsipras urged the Greek people to vote ‘no’, but said such a vote will not be an endorsement for Greece to exit the euro, but rather allow the country to negotiate better terms with its international creditors.
Following a letter sent by Tsipras to European leaders seeking a new deal, officials there regarded the terms as insufficient to bring them back to the negotiating table before Sunday’s referendum.
For U.S. stocks, Bob Doll, senior portfolio manager and chief equity strategist at Nuveen Asset Management, said in the short-term, focus is all about Greece.
“I’m hoping that this is the beginning of the end in that the Greek government is saying they’ll go along with things. I think most of us thought it would be wrapped up before the events of the last three days, though,” he said. “Now Greece is backing off again – but I suspect they’ll come to some sort of agreement that will find the band-aids necessary to get to the next crisis. And there will be a next crisis.”
Despite the rapid developments from the other side of the world, a lot of the focus in U.S. markets was on the economy and the upcoming June jobs report on tap for Thursday – a result of the shortened week from the July Fourth holiday.
“It’s been an emotional roller coaster,” he said. “One day there’s red all over the tape, and the next day there’s green on potential good news. Underlying all of that is a U.S. economy that’s slowly getting better and that’s supportive of higher prices [in the market],” Doll said.
He added in addition to Greece and economic data, the flurry in deal activity also adds to the optimism pushing markets higher over the intermediate term.
Jeff Kravetz, regional investment director for U.S. Bank Wealth Management, agreed with Doll and said though the action unfolding in Greece is a likely driver in the near-term for the markets, it won’t de-rail the positive long-term momentum for the U.S. economy and stock markets.
“We believe the second half could be very good for stocks in the U.S. because of better economic data,” he said. “Energy markets should be helpful for consumers. We don’t see energy spiking back up just because there’s so much oversupply, and the fact that global demand is fairly weak.”
On the data front Wednesday, a report from payroll processor ADP showed private-sector employment notched its biggest gain since December, which could be a welcome sign for the Federal Reserve as it continues to closely monitor data before it makes a decision to begin raising interest rates from historic lows. Private employers added 237,000 jobs for the month, a bigger gain than the 218,000 jobs economists expected.
Also on the jobs front, a report from Challenger, Gray & Christmas showed mid-year job cuts reached the highest level since 2010. According to the report, over the first half of the year, employers announced 287,672 job cuts, a 17% increase from the same period a year prior. The report also noted the biggest number of cuts, which totaled 86,978, came as a result of restructuring, while 69,582 of the layoffs came from lower oil prices.
The Institute for Supply Management's gauge of manufacturing activity in the U.S. rose to 53.5 in June from 52.8 in May. The reading came slightly above Wall Street expectations for an increase to 53.1, and matched the best reading so far this year. Readings above 50 point to expansion while those below indicate contraction.
In corporate news, property and casualty insurer Ace (ACE) agreed to buy rival Chubb (CB) in a $28.3 billion cash-and-stock deal. The acquisition is one of the biggest announced deals of the year, and the companies expect the transaction to close in the first quarter of 2016.
On the earnings front, General Mills (GIS) reported profit of 30-cents a share on revenue of $4.3 billion as the company continues to grapple with changing consumer taste and as it works to remove artificial flavoring and coloring from its line of cereal brands.
June auto sales were also released Wednesday and showed a move toward the best June in a decade thanks to consumer demand for more expensive sport-utility vehicles and trucks. Figures also showed the average transaction values continued to rise.
In commodities, U.S. crude oil prices settled 4.22% lower, falling to $56.96 per barrel as inventory data weighed on sentiment. The settle was the lowest since April 22 and the biggest decline since April 8. Meanwhile Brent crude prices fell 2.36% to $62.09 per barrel. Gold also declined 0.26% to $1,168 per troy ounce.
Overseas markets also saw a bounce on Wednesday amid optimism over a Greek debt deal. The Euro Stoxx 50, which tracks large-cap stocks in the eurozone, surged 2.10% to 3496. Meanwhile, the German Dax jumped 2.15% to 11180, the French CAC 40 jumped 1.94% to 4883, and the UK’s FTSE 100 rose 1.24% to 6601.
In Asia, the Shanghai Composite, which fell into bear-market territory this week, dropped 5.23% to 4053. Hong Kong’s Hang Seng rose 1.79% to 8058, while Japan’s Nikkei saw a 0.46% tick higher to 20329.
In currencies, the euro fell 0.69% against the U.S. dollar.